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All that You Need to Know When it Comes to Credit Review and Credit Extension
The need to conduct credit review is so that the financial institution will be able to check the credit profile of an individual that they have credit extension. In credit extension, you will have a customer, have products on credit to pay at a later date. In credit extension a lot of things that need to be done by the creditors. It is hence necessary to consider some factors and this will be done through credit review. There is more here that you will get to know about credit review and credit extension.
In credit extension, it is necessary to ensure that you consider the credit risk that is involved when it comes to this. The financial institution or the creditor will need to ensure that they know the risk percentage that they are willing to accept. There is a possibility of getting to be paid by the debtor or even failing to get paid the amount either in full or some of it. The creditor will need to evaluate whether they are in a position to handle the bad debt or not, from the person they have offered the loan.
The next aspect that is necessary when it comes to credit extension is the credit terms. In credit extension, the terms that will be set will be those that will focus on the amount that will be increased and the time duration within which the loan will require being paid. The time should be favorable to the customer as well as the creditor. There are those creditors who will require a certain percentage to be paid on top of the amount but this will increase the level of the risk. For high-interest rates, the debtor may fail to pay back the cash.
It is important to ensure that you think about the credit qualification of the client when it comes to credit extension. It will be necessary to ensure that you review for the credit qualification and this may include the current credit score among many other factors. The importance of the credit score is to show those who are trusted by the money lenders for paying the loans they get. The creditor should hence have several forms that will need the financial details of the individual, their reports concerning the credits and the loans other loans that they owe other money lenders and other important info.