What is Judgmental Credit Analysis?
Judgmental credit analysis occurs when a banker approves or denies a
How Does Judgmental Credit Analysis Work?
Let's say Company XYZ needs to borrow $1 million to lease a new factory. It calls John Doe at Bank ABC about getting a loan request because he doesn't want to lose any more on factory . John has conducted a judgmental credit analysis.. John just got burned on lending $500,000 to another company for factory space, so he denies Company XYZ's
Why Does Judgmental Credit Analysis Matter?
Lending is a complicated business, and creditworthiness is often a large part of determining whether a business or individual gets a credit scores and reporting are crucial.. In turn,
However, when a revenue for the bank) or when a lender wants to 'get into' certain business sectors or lending areas for reasons unrelated to the borrower, may approve or deny credit even when the borrower's credit scores indicate otherwise.already has a relationship with the borrower (let's say Company XYZ already has its accounts at Bank ABC, which generate tens of thousands of dollars a year in