Loan files with insufficient or outdated credit information present a significant risk for financial institutions. A problem situation may not be discovered soon enough to turn it around and prevent it from becoming an at-risk loan. Loan officers unfamiliar with a specific credit or creditor must wade through a maze of information. If files are not kept current or are in disarray, you run the risk of overlooking vital information and making poor judgment calls.
A credit information file should be a road map to your lending decision. At a minimum, your credit files should address the 5 P's:
- Person - Who is the borrower? Other than a sole proprietorship, what authority does the borrower have?
- Purpose - What are the monies going to be used for? Does the borrower have experience in the stated purpose?
- Payment - How and when are the monies going to be paid back? Does the repayment plan match the purpose of the loan and the cash flow of the borrower?
- Protection - What does the bank have as secondary and tertiary sources of repayment/collateral to protect against a default?
- Plan - How is each credit extension going to be serviced? What are the reporting requirements for the borrower concerning financial information and non-possessor collateral agings and listings?
SS&C's BANC Mall can help you make credit file maintenance a manageable task by having critical information show up on your desktop instantly via the Internet. Using BANC Mall, you can access consumer credit reports from all three major reporting bureaus (Trans Union, Equifax and Experian). These reports can also provide you with Fair Isaac scores, bankruptcy predictors, online fraud scams, creditor decodes and OFAC searches.