Answer to Question #241341 in Finance for Neaj

Question

How does a Credit Manager treat and decide a dummy credit application?

In a given credit application, assume that the credit manager, upon investigation, found out that indeed it is a dummy application. The credit applicant himself does not enjoy an A-1 credit rating although he may not be totally unacceptable credit-wise. But the accommodating party is established to be a very good credit risk. Having full knowledge of these facts, should a credit manager approve or disapprove the credit application?

     

Answer 1

Credit managers usually oversee credit policy application within a bank. Respective group usually decide on the credit limit that should be imposed as well as reasonable risk level that may be accepted.

The manager should not approve the credit application since the risk level is beyond , which may lead to some adverse effects. Considering the fact that the credit applicant never enjoys credit rating, satisfaction within the institute needs to be maintained.