James Marth M.

Rayos 08/19/16
Finm6 A

I. Dummy Credit Application

Considering that the credit applicant issued a dummy credit application which was

later found out by the credit manager, the application should not be approved. Although

the dummy applicant have a good credit rating, the person behind the application has

the opposite. Expectedly, the person who will pay the loan is the person behind the

application which has a low credit rating. Taking into consideration the 5 cs of credit, the

applicant is not qualified base on his character or his credit rating. The financial

institution may suffer from a non-payment of obligation or default by the current

applicant if the application was permitted.

II. The engineer going on his own

The credit manager should approve the application of loan from Engr. De la Cruz.

Considering that Engr. De la Cruz is qualified base on the 5 cs of credit application,

the approval of loan would not be put into waste. On the other hand, the Sales

manager seems to be doubtful if the firm can get their return from Engr. De la Cruz

loan application. The division manager should advice the sales manager to

reconsider the application considering that the higher the risk of lending a loan, the

higher the return. However, further assessment and investigation should be done

before approval of application to ensure safety in relation to prepayments.