Credit selection involves application of techniques

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Unformatted text preview: ds, (2) credit terms, and (3) credit monitoring. Credit Selection and Standards credit standards The firm’s minimum requirements for extending credit to a customer. Credit selection involves application of techniques for determining which customers should receive credit. This process involves evaluating the customer’s creditworthiness and comparing it to the firm’s credit standards, its minimum requirements for extending credit to a customer. Five C’s of Credit five C’s of credit The five key dimensions— character, capacity, capital, collateral, and conditions—used by credit analysts to provide a framework for in-depth credit analysis. One popular credit selection technique is the five C’s of credit, which provides a framework for in-depth credit analysis. Because of the time and expense involved, this credit selection method is used for large-dollar credit requests. The five C’s are 1. Character: The applicant’s record of meeting past obligations. 2. Capacity: The applicant’s ability...
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This document was uploaded on 01/19/2014.

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