Achieving The Integrity of Bank’s Credit Approval Process Through CCR:
There is urgent need for banks to outsource some aspects of their credit management operations. The one most relevant is that of assessing borrower’s creditworthiness through an impartial independent company credit report. Before Bank management decides whether or not to approve a creditline for a borrowing company or an entity, there must be a strong determination as to whether or not the prospective loan applicant will be able to meet its obligations. Providing independent objective assessment of the credit worthiness of borrowing company helps bank management to decide how risky it is to lend money to certain company.
As lending opportunities become more diversed, it is equally difficult to decide which borrowing company is good for a safe and sound credit portfolio engagement. Quite alright, there are advantages to lend to different borrowing markets, but the risks associated with such lending must be identified and mitigated against. It is important therefore to gain insight into different borrowing environments to understand the risks and non-risk advantages that each environment may pose and to articulate healthy management decisions. With the outsourced company credit report, bank credit managers will be able to measure the ability and willingness of a borrowing company to keep its financial commitments. Such report (not the type banks get from credit bureaus and is certainly not the typical credit rating), when placed side by side with lender’s own internal credit appraisal process, ensures a robust access to web of information on the loan applicant, resulting to a safe and sound creditworthiness assessment, good facility monitoring and future loan recovery prospect.
Within international best practices, outsourced credit report on borrower is adjudged to be a comprehensive major tool which can help in determining company’s ability to honor its debt responsibilities; thus, the report is an indicative of a measure of borrower’s ability and willingness to repay debt.