What is the credit process?

Question

Accepted Answer

The credit process is the steps taken by a lender to assess a borrower's creditworthiness and determine the terms of a loan or credit line.

1. Application: Borrower submits a credit application with personal and financial information.
2. Review: Lender evaluates the application, credit history, income, and other factors.
3. Decision: Lender decides whether to approve or deny the credit request and sets terms if approved.
4. Disbursement: If approved, funds are disbursed to the borrower.
5. Monitoring: Lender monitors the borrower's repayment behavior and credit utilization.
6. Collection: Lender takes action if the borrower fails to repay as agreed.
7. Reporting: Lender reports the borrower's payment history to credit bureaus.