Neotas Credit Risk Assessment FAQs
Find below a selection of the FAQs we hear when discussing Credit Risk Assessment, our investigative Platform and Credit Risk Reports.
Why is non-financial data important when assessing credit risk?
There is a vast array of non-financial data that can be used to help make more informed credit risk decisions, which are proven to be more effective. By considering non-financial data such as customer/employee reviews, social media footprints, adverse media, surface and deep web sources, you are able to build a more complete picture of credit risk. Take for instance, the network analysis we conducted that revealed hidden international connections.
Why aren’t my existing credit risk checks sufficient?
At present, public online data is a largely untapped resource when it comes to credit risk due diligence. Placing greater emphasis on the C & A in the CAMPARI model – Character and Ability – can help improve decision making by considering wider risk factors than purely financial data. We go beyond traditional processes and consider all available risks. This enables quicker and more informed decision-making.
How much information do you need to get started?
We only require basic details such as individual name / company name, address, email etc.
How far back do you look?
Our Platform can look back as far as there is information available, regardless of time. Such as finding fraudsters that have ‘laid low’ for more than 10 years!
Do you provide evidence of the links within the networks?
Yes – all searches and findings are fully auditable. The Neotas Platform records all investigative ‘trails’ and the results.
What is credit risk assessment?
Credit risk assessment is the process of evaluating the creditworthiness of individuals, businesses, or entities to determine their ability to fulfill their financial obligations, particularly their ability to repay debts or loans. This assessment helps lenders and financial institutions make informed decisions about extending credit or providing loans.
The credit risk assessment typically involves the following steps:
Data Collection: Gathering relevant information about the borrower, such as financial statements, credit reports, income, employment history, and previous credit history.
Analysis of Financial Information: Reviewing the borrower’s financial statements, cash flow, and profitability to assess their financial health and ability to repay debts.
Credit History Check: Examining the borrower’s credit report to see their past credit performance, including any outstanding debts, late payments, or defaults.
Credit Scoring: Using credit scores or credit models to quantify the borrower’s credit risk based on various factors.
Risk Profiling: Determining the borrower’s risk category (low, medium, or high) based on the assessment results.
Collateral Evaluation: Assessing the value and quality of any assets provided as collateral for the loan.
Debt-to-Income Ratio: Evaluating the borrower’s debt-to-income ratio to gauge their capacity to manage additional debt.
Industry and Economic Analysis: Considering the economic and industry-specific factors that could impact the borrower’s ability to repay.
Regulatory Compliance: Ensuring compliance with relevant regulations and internal credit policies.
Decision Making: Based on the assessment results, lenders decide whether to approve the credit application, set appropriate loan terms, or even decline the credit request.
Credit risk assessment is essential to manage and mitigate potential losses associated with non-performing loans. It helps maintain a balanced portfolio and safeguards financial institutions’ stability and profitability.
If your question hasn’t been answered here, then we would love to hear from you. Contact us directly, or schedule a call below.
