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All that You Need to Know When it Comes to Credit Review and Credit Extension

Credit review is the process through which a creditor or a financial institution will assess the credit profile of an individual that they have extended the credit. Credit extension is whereby you will have a person in a credit institution get to have credit increase or an increased time to pay the loan that they have. In credit extension a lot of things that need to be done by the creditors. To have credit extension, you will need to ensure that you evaluate for a number of considerations. In the section below, you will learn about all the necessary considerations that will be important in credit review and credit extension.

You will need to ensure that you consider the credit risk that will be involved in credit extension. The financial institution or the creditor will need to ensure that they know the risk percentage that they are willing to accept. With the customers, there will be the probability of getting to pay the loan and the other will be the probability that they don’t pay it in full or fail to pay the loan at all. 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 this, the amount of cash that you get to add to the customer and the period need to be discussed or looked into. In the loan or credit payment time, the time will need to be at a point that will be good for the person that will pay back and also to the creditor or the lender. The risk is increased when the amount of the money that is the interest is high. When the amount gets too high, the debtor may be unable to pay.

The other important factor to evaluate for in credit review and credit extension is the credit qualification of the customer. In this case, the credit score will be of importance as well as the cash that the person gets because these will determine the possibility and the capability of the individual to pay the loan or the credit. A person with a good credit score has been paying the loans and credits promptly. For the qualification, there should be a number of forms that the individual should fill that will show the credit and salary details and if they have other debts they need to pay to other financial institutions.

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