Credit Evaluation Criteria Quiz
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Questions and Answers

What unethical practice involves a conspiracy between the borrower or bank employees for loan approval?

  • Clarity
  • Collusion (correct)
  • Consanguinity
  • Connection

What is the advantage of having blood relations with the DIRECTORS, OFFICERS, STOCKHOLDERS AND RELATED INTEREST (DOSRI) in loan applications?

  • Guaranteed loan approval
  • Higher chances of loan approval (correct)
  • Lower interest rates
  • Quicker loan processing

Which culture still influences the evaluation or approval of loan applications?

  • Curiosity culture
  • Collegial culture
  • Kumpare / padrino / pañero culture (correct)
  • Credence culture

What should the information gathered for the credit evaluation process be to obtain the desired credit judgment?

<p>Credible, dependable, reliable (B)</p> Signup and view all the answers

Who bears the responsibility for rendering judgment on loan applications in a fair and equitable manner?

<p>A group with credit evaluation expertise (D)</p> Signup and view all the answers

What is essential for credit investigators and evaluators according to the text?

<p>Curiosity for data gathering (D)</p> Signup and view all the answers

What does the 'C' in 'Cs in Communication' stand for?

<p>Clarity (C)</p> Signup and view all the answers

Which of the following is NOT a characteristic of a well-prepared credit report?

<p>Ambiguous (C)</p> Signup and view all the answers

What does the principle of 'Coordination' emphasize?

<p>Cooperation between different organizational units (D)</p> Signup and view all the answers

Which of the following is NOT mentioned as a characteristic of a well-prepared credit report?

<p>Creative (C)</p> Signup and view all the answers

What does the principle of 'Completeness' emphasize?

<p>Providing a detailed and thorough credit report (B)</p> Signup and view all the answers

Which of the following is NOT a responsibility of the credit department?

<p>Promoting creativity in credit report writing (A)</p> Signup and view all the answers

Why is it important for the lender to know the purpose of the loan?

<p>To ensure the loan proceeds will be disbursed according to the borrower's plan. (D)</p> Signup and view all the answers

What does 'commitment' refer to in the context of a loan application?

<p>The borrower's equity in the business subject to the loan application. (B)</p> Signup and view all the answers

Why do lenders conduct an ocular inspection or end use verification?

<p>To understand the borrower's objectives and ensure loan proceeds are used as intended. (B)</p> Signup and view all the answers

Why is it essential for lenders to be cautious in evaluating loans?

<p>To ensure fair credit judgment and manage risks associated with lending. (A)</p> Signup and view all the answers

What does 'protection' represent in a credit transaction?

<p>The collateral and secondary sources of repayment in case of default. (A)</p> Signup and view all the answers

How does knowing the purpose of a loan aid in structuring its repayment schedule?

<p>By determining when the borrower will receive cash flows for repayment. (B)</p> Signup and view all the answers

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