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CMCP CH 7 QUESTIONS WITH ANSWERS
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CMCP CH 7 QUESTIONS WITH ANSWERS
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CMCP CH 7 QUESTIONS WITHANSWERS
Credit Evaluation - ANSWER- refers to the process borrowers are subjected to for them
to be eligible for funding, or to pay for products within a specified period.
Credit Evaluation - ANSWER- • It involves collecting information from the borrower,
analyzing the information provided, and making a decision on whether or not to approve
the loan.
Credit Information - ANSWER- • Information about a person's or company's ability to
pay debt, examined especially by banks before they decide to lend money.
information
includes public information, your credit card, car loans, and mortgages. However, it
does not emphasize information such as race, gender, religion, sexual orientation.
Public Information - ANSWER- This includes items such as tax liens or court judgments
against the subject.
Personal Information - - ANSWER- which includes name, past and present addresses,
social security number and of course, your employment history and sources of income.
Gathering of Information - ANSWER- In this step, lenders collect necessary credit
information that will help them in determining the creditworthiness of the borrower.
Tax liens - ANSWER- is the government's legal claim against your property when you
neglect or fail to pay a tax debt. The lien protects the government's interest in all your
property, including real estate, personal property and financial assets.
Court judgment -
o - ANSWER- is a court order that is the decision in a lawsuit. If a judgment is entered
against you, a debt collector will have stronger tools, like garnishment, to collect the
debt.
Account History - ANSWER- _______ may be referred to when a record of transactions
by an individual or organization.
▪ Whether you pay timely payments on your credit cards, mortgage, auto loans, etc.
▪ It can also include your purchasing habit, how often you use credit in supermarket to
pay for groceries, your shopping behavior, irregular transactions in your account, etc.
, Inquiries by creditors - - ANSWER- this includes all inquiries in your credit history that
occur when you apply for new credit.
Salesman's Reports - ANSWER- The company's first contact with a new customer is
the ___. If all goes well, the _____ will have the most frequent contacts with an
established customer. It is, therefore, necessary that salesmen should be trained to
submit credit applications on all prospective and/or new customers, and when
necessary to obtain current financial statements. Most firms and individuals are
conditioned to the necessity of furnishing credit information to support credit transaction.
Customer Supplied Information - ANSWER- In the final analysis, the principals of the
company being investigated have many answers not obtainable in any other quarter.
Indeed, there is no better source of information about the operation and financial
condition of a business than the business itself. Therefore, it is reasonable to expect
that direct contact with a customer can provide the credit man with available financial
details, banks and trade references, and other information of importance of the credit
exposure, and the degree of the cooperation which can be obtained from the customer.
Bank Information - ANSWER- Banks are usually quite knowledgeable about marginal
companies. The larger banks in the metropolitan areas have files which contain a
wealth of information.
Having obtained the name of the customer's bank by means of direct inquiry or by
noting the bank on which his checks are drawn, the credit manager or representative is
in a position to secure from the bank further helpful information.
A letter of inquiry to the customer's bank usually will bring a reply indicating the
customer's bank balance expressed in such terms as "medium four figure balance or
"low figure balance" together with information concerning the customer's line of credit, if
any, and the manner in which payments on bank loans are handled.
The best means of obtaining complete information from a bank, as from any other
sources, is by personal contact. The credit manager should make a special point of
becoming well-acquainted with members of the credit department in his bank.
Credit Interchange - ANSWER- Direct interchange of credit information is also one of
the most valuable sources of information. The credit analyst should not overlook the
possibility of directly exchanging ledger and other pertinent information with credit
representatives of other concerns known to be supplying the customer under review. He
should keep in mind, however, that this is probably the most costly method of obtaining
the information desired. Hence, direct interchange should generally be limited to those
cases in which there is a substantial exposure for the inquiring company, or in which the
interchange bureau is, for some reason, inadequate, or when group interchange is not
practicable because of the distant location of suppliers.
Credit Reporting Agencies - ANSWER- The service of one or more agencies or bureaus
may be availed of by the credit department of the company. This, of course, depends
upon the number of accounts the company has. The mercantile agency report usually
attempts to cover all the major factors involved in the credit decision, from history
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