Reference no: EM133001482
The Credit Officer at Real Bank has awarded a score to Joe Black based on information provided for each category considered for risk assessment relating to his application for a personal loan. The score awarded reflects the level of risk of default. The higher the score the lower is the risk. The lower the score the higher the risk. Joe is a relationship lending Customer with the Bank. Joe's tax rate is 20%.
The maximum score (lowest risk) and the minimum score (highest risk) the Bank awards for each category are indicated. A score in between indicates Medium Risk.
Category Considered for Risk AssessmentInformation given by Joe BlackScore for Joe BlackMaximum ScoreMinimum ScoreAnnual gross income $45,00020600Total Debt Service36 %2560-10Major credit cards610200Age 2010305Residence- Owned /Mortgaged/ or rented Information already provided10505Credit history Missed a payment 2 years ago040-1
Consider each category and information provided by Joe Black. Based on the score awarded by the Credit Officer:
a. State whether it indicates high risk, medium risk or low risk.
b. Explain briefly, the reason why you think the information provided by Joe for each category indicates the level of risk that you selected.
c.Apart from the scorecard what other factors should Joe's Manager consider in evaluating Joe's application for a loan?
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