MODERN FOREIGN METHODOLOGIES FOR ASSESSING CUSTOMERS’ CREDITWORTHINESS AND THEIR APPLICATION IN NATIONAL PRACTICE

Abstract

A correct and comprehensive assessment of a customer’s creditworthiness is the primary and most important tool of credit risk management at the pre-lending stage, because errors made at this stage subsequently become the main source of problem loans. It is therefore of practical importance to study foreign countries’ methodologies for assessing creditworthiness and to identify those elements that can be applied in national practice.
In the practice of US commercial banks, the “6C” rule is used to assess the creditworthiness of corporate customers. Under this rule, the customer’s character (Character), meaning its previous credit history and reputation; its capacity (Capacity), meaning its financial condition and the analysis of its liquidity and financial ratios; and its capital (Capital), meaning the ratio of own to borrowed funds and the quality of assets, are analyzed comprehensively together with a number of additional financial and non-financial criteria, such as collateral, general economic conditions, and the ability to exercise control [1]. This multi-criteria approach makes it possible to evaluate a customer not only by its current financial condition but also in terms of its future stability and resilience to the external environment.