Assessment Of Credit Application (A Financial Management Topic)

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What Is a Credit Application?
A credit application is a questionnaire that a lender or business will require you to complete before lending you money or extending credit to you. Credit applications are customary when you're trying to obtain a home loan, home equity loan, automobile loan, business loan or credit card. One may also be required when you want to rent an apartment. The information you supply on a credit application helps the lender decide whether to lend you money and how much, and assess your ability to repay the loan.
A lender uses a credit application to determine your credit worthiness.
Identifying Information
The first part of the credit application asks you to provide your basic contact information such as name, address and phone number. This section will also typically ask for your social security number if you're applying as an individual, and both your SSN and the employer identification number or EIN of the business if you're applying for a business loan. The application may also request the amount of the loan you are seeking and the purpose of the loan.
Financial Information
This section will ask you about your income and financial background. As an individual, you will be asked about your salary or annual earnings, assets, home ownership status, other outstanding debt obligations and banking information. If it's a business application, you will be asked about your annual sales and net income in addition to the other items above. The application may also request that you submit a copy of recent tax returns or audited financial statements with the application.
References
A credit application will contain a section to list individuals or businesses you have worked with and paid for services. The creditor will want to know contact information including name, address, phone number and email as well as business details about the relationship. You will also be asked to provide facts about these references, such as the length of the relationship and payment history. The creditor will likely contact these references to verify the nature of your relationship.
Loan Guarantors
The creditor will ask for contact information for each co-signer as well as social security numbers, driver's license numbers and salary or financial information.
Terms and Conditions
A credit application will also contain some legalese that you must agree to when submitting the credit application. This section includes the creditor's request to run a credit and background check on all loan applicants, and will discuss details on the approval process and criteria. Sometimes it will even include the specific terms of the loan. These disclaimers usually address the interest rate, fees, debtor expectations and the dispute resolution process that the applicant is agreeing to by submitting the credit request
Assessment Of Credit Application
The information you provide on a credit application tells a story about your ability to handle money. Whether you are looking to finance a home, a car or future purchases, a potential lender uses this information not only to assess your ability to repay, but to determine whether or not you will repay. 
The credit application process usually involves investigation, verification and assessment before your lender makes a final determination.
Credit Report
Verification
Assessment
        Automated
        Manual
Practical Study
United bank limited established in 7th November 1959. By June 1960, shortly after six months of opening its doors to the public, UBL had branches in Karachi, Lahore, Dacca, Lyallpur, Chittagong and Narayangaj. In 1963 UBL became the first bank in Pakistan to have a branch overseas-on William Street in London. In 1990,s the govt. of Pakistan decided to change the face of banking by creating a blueprint to privatize UBL. 52 years of glorious history now UBL have more than 1300 branches in Pakistan and under the supervision of Chairman Sir Anwar Pervez. Its 15 branches outside the country are in the United States of America, Qatar, UAE, Bahrain, and Republic of Yemen. It also has representative offices in Beijing, China, Tehran, Iran, and Almaty, Kazakhstan. It owns subsidiaries in the UK (United National Bank Limited), and in Zurich, Switzerland.
UBL’s state of the art online banking, customers are able to access their account from more than 1200 branches located in 150 cities across Pakistan. Transactions such as Cash Deposit, Cheque Encashment, Stop Payment, Account Statement, Funds Transfer, and Bill Payments are done online without the need to travel to the local branch.
Buying a House:
Eligibility Criteria
  • Minimum monthly income: Rs.50,000
  • Age: 23 to 65 years
  • Resident Pakistani
  • Self-employed businessman/professional or salaried individual
  • Minimum loan size: Rs. 500,000
Documentation Requirements
  • Copy Of NIC
  • Two recent Photographs each of primary as well as co-borrowers
  • Signed Lou (Letter of Understanding), which states the applicable rate at the time of booking of loan.
  • General Income Documents for Salaried and SEB/SEP are given below. However, your exact Documentation Requirement as per your specific Segment & Profession will be communicated to you by our respective ROs.
Salaried Person
  • Employment Certificate confirming last 12 months work experience
  • Tax Document for the past 24 months
  • Current Salary Slip
  • Bank Statement for the last 12 months
Markup => 3.5%
SWOT Analysis
Strength:
  • UBL offering Customized Products and services. Aggressively better then its competitors.
Weakness:
  • UBL is a step behind in using new technology as compared to other banks.
Opportunities:
  • By bringing new technology and modern business processes will bring the change and increase their profitability.
  • Mobile banking
Threats:
  • Large and increasing competition.
Conclusion:
After the establishment of UBL in the year of 1959, the bank was successful in achieving some of its objectives. In the very first the bank earned a handsome profit. After the exhaustive era of nationalization, the bank is now transforming to private ownership again. The decade of 60’s was dominated by on exceptional increase in economic activities. This result in bringing various changes in the management and structure of the commercial banks. In area of management more professional were brought in and the same was done with the structure. UBL was not an exception to these changes. In the last decade of the century the bank had witnessed very bad banking business. To rebuild the bank new professional people were inducted under the leadership of Mr. Zahoor Soomro.
In United Bank Limited, it indicates that the process of assessing credit application is working effectively in the organization.
Location: Lahore, Pakistan

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