Lecture 2 - Sources of Credit Information

Question 1

What is credit Information and purpose of it

Answer 1

Any information related to making of credit decision

• Must be relevant & Tidy
• A form of initial screening to remove undesirable borrowers

Question 2

How is Initial Screening done?

Answer 2

• Searches at high court registry (bankruptcy/winding-up search
• Registry of companies (Questnet search)
• World/Norkom checks (not important purpose: money laundering, regulatory reporting, assess customer risk)

Question 3

Sources of Credit Information?

Answer 3

Financial statements
Bank Statements
Ageing Reports
Searches at Registry of Titles & Deeds
Personal interview & visit
Customers’ Track Records
Credit Bureau Report
Trade checks with suppliers /  buyers
Financial spreadsheet

Question 4

Types of Financial Statements

Answer 4

Directors’ Statement

Auditors’ Report

• Qualified Report
• Clean Report

Balance Sheets – A / L / OE

Profit & Loss Statement – Earnings/Expenses

Cashflow Statements – Operating / Investing / Financial

Notes to Account

Question 5

Explain Bank Statement:

Answer 5

i gave up