CREDIT

APPLICATION
FNMNGT3
CREDIT AND COLLECTION
Objectives
• Design credit application forms.
Credit Application
• A credit application (Kagan, 2020) is a request for an extension of
credit.
• Credit applications can be done either orally or in written form,
usually through an electronic system.
• Whether done in person or individually, the application must legally
contain all pertinent information relating to the cost of the credit for
the borrower, including the annual percentage yield (APY) and all
associated fees.
Credit Application
• A credit application is a form used by potential borrowers to get
approval for credit from lenders.
• Today, many credit applications are filled out electronically and may
be improved in only a short amount of time.
• The information provided on credit applications is regulated, and laws
such as the Truth in Lending Act provide consumer protection and
transparency.
Credit Application
• A credit application (Accountingtools.com, 2019) is a standardized
form that a customer or borrower uses to request credit.
• The form contains requests for such information as:
• The amount of credit requested
• The identification of the applicant
• The financial status of the applicant
• The names of credit references
• Standard terms and conditions
Credit Application
• The credit application form is issued by a supplier or lender with the
intent of standardizing the information it uses to make credit
decisions.
• Additional information may be used in making a credit decision, such
as a credit report from a credit rating agency and information
received from the credit references supplied by the applicant.
• Based on the information in a completed form, a credit analyst may
elect to grant or deny credit, or may impose additional conditions,
such as a personal guarantee or collateral.
• The granting of credit through an online form is highly automated, so
that the entire process may only require a few minutes to complete.
Credit Application
• Credit application processes are increasingly becoming faster and
more automated as new financial technology systems emerge in the
credit market.
• Technology allows lenders to offer borrowers varying types of credit
applications that can be done either in person or individually.
• Technology also allows borrowers to complete a credit application
completely on their own through an online application.
Credit Application
• Credit card applications are typically processed through an online
credit application often providing the borrower with immediate
approval.
• Banks and emerging fintech companies have also increased the online
lending options available for borrowers.

• Fintech are computer programs and other technology used to support

or enable banking and financial services.
Credit Application Information
• In all types of credit applications, the information requested is
typically the same.
• A lending decision will be based on a hard credit inquiry that provides
details on a borrower’s credit score and credit history.
• In addition to credit scoring, lenders also base loan decisions on a
borrower’s debt to income.
• Each individual lender, however, will have their own standards for
credit underwriting and credit approval.
Credit Application example: Personal loan
BDO
Credit Application example: SME loan
BDO
Credit Application Samples