customer assessment & credit worthiness
TRANSCRIPT
CUSTOMER ASSESSMENT &
CREDIT WORTHINESSTRAINING WORKSHOP FOR SME’S OFFICERS’ OF
WALLSTREET STRUT INVESTMENT LIMITED.
PRESENTING BY THE GENERAL MANAGER,
‘BAMI ADEDAPO
LENDERS MUST EVALUATE THE RISKS OF LENDING MONEY TO OTHERS. IN MICRO LENDING, CREDITORS GENERALLY FOLLOW THE SAME PRINCIPLES TO EVALUATE A BORROWER'S CREDITWORTHINESS.
An assessment is done in a
likelihood that a borrower
might default on his or her
debt obligations. It is
based upon factors, such as his/her history of repayment and credit score. We as a lending institution also
consider the availability
of assets and extent
of liabilities to determine the probability of
default.
Assessing customers is a vital part of business
management because its enables us has an
organization to meet customers’ needs while
experiencing better profit and sound business growth.
As creditor we usually look at three factors known as the "three Cs": capacity, capital, and character.
Capacity
The present and future ability of the customer to meet his/her financial obligations. Some of the areas examined would be the customers’ work history and the amount of debt that he/she already owe (if any).
This could be in savings and other assets that could be used as collateral for loans. Even if you are not required to post collateral, many creditors express a preference that you have assets other than income that could be used to repay a loan.
Capital
CHARACTER
This boils down to trustworthiness, promptness in paying the existing bills and debts, which will be seem in the customer’s credit history.
A Customer can be assessed through this ways among others:
Self-Assessment
This is the process of looking at your clients closely in order to assess aspects that are important to his/her identity.
Existing Data
This module is particularly useful where data on the existing portfolio of loans is available to us.
These is an act of carefully watching and listening to someone. It is an activity of paying close attention to customers in order to get information they will never have allowed you to be aware of.Therefore by watching and listening you will be sure you will pencil down one or two info. Then you make you remark.
Observation
Reference
This could be done through information from other lending institutions as observed.
Therefore, the following fact should be laid out while running a report
Analysing Creditworthi
ness
Credit Evaluation
and Approval
Create a smart credit policy
Have a fair and Accurate
credit Transaction.