STEPS INVOLVED IN CREDIT ANALYSIS

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sunandaC

Sunanda K. Chavan
STEPS INVOLVED IN CREDIT ANALYSIS /EVALUATION (5C’S)

 CHARACTER: integrity and moral attitude of the customer.

 CAPACITY: ability of the customers to meet credit obligations on time out of operating cash.

 CAPITAL: amount invested by customers in its business.

 COLLATERAL: security offered by the customer.

 CONDITIONS: general economic and competitive conditions that effect the cuctomers.


SOURCES OF CREDIT INFORMATION

 FINANCIAL STATEMENT

 BANK REFERENCES

 EXPERIENCE OF THE FIRM

 TRADE CHECKING

 CREDIT RATING ORGANISATIONS (EX; S&P, MOODYS,FITCH,etc.)
 
Hello Sunanda, Again a wonderful post and very much enlightening. Here are the benefits of Credit analysis. This will provide the proper information about why credit analysis is effective and efficient.

Benefits of Credit Analysis

Increases the efficiency
Access to other antecedents
Determine adequate credit conditions
Minimizes debt collection expenses.
Outsourcing of client evaluation
 
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