II. Credit Report 1. Examine the sample credit report provided in Exhibit 15.9.
ID: 2752197 • Letter: I
Question
II. Credit Report 1. Examine the sample credit report provided in Exhibit 15.9. From a lender's perspec rom a lender s perspec- tive, explain the importance of infomation regarding the following a. Number and type of businesses that report credit information b. Date the account was opened c. Date of last activity on the account d. Highest credit amount and terms e. Balance outstanding, amount past due, and status 2. How would you interpret the information provided for Alfonso B. Doe in the section provided for Alfonso B. of the report on courthouse records?Explanation / Answer
Importance of the informations
Number and type of businesses
a.A lender is able to know about the geographical area of operations of the credit rating agency as well as the types of businesses covered by them shows their experience and expertise in the required area. These lend credibility to the figures supported by the agency.
b. Date the account was opened- Indicates the length of the relationship with the credit grantee, which gives a fairly good idea to the lender about the credit -worthiness of the potential borrower
c. Date of last activity on the account - The lapse of time in between indicates to the lender - whether short or long gap- of inter- action between the agency and the grantor- the capacity of the potential borrower to perform his obligations as agreed.
e. Highest credit amount and terms - helps to know the maximum amount that can be lent to the borrower and his maximum capacity benefitting both.
f. Balance O/s, amt.past due & status-In combination with the rest of the informations, Balance outstanding as on the report date helps the lender to arrive at a decision about the performance of the borrower .Amounts due past the due date need to checked with the grantor before giving credit.
Current status of the account - whether fully paid/ still due/ past due /sticking to time - all these informations are useful in assessing the credit-worthiness of the borrower.
Intrepretation of cort-house records
A lien or charge has been created throuh thecourt at Fullton city against Doe's personal assets for $ 26667 & court surcharge $ 780
Doe filed bankruptcy(inability to meet his liabilities -agreeing in a court) in the same court, showing his liabilities as $ 15787
Judgement has been given by the court after verification of the bankruptcy petition, accepting $ 8984 as full and final settlement from Doe to ABC real Estate