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Assessment of Client Creditworthiness  

Who benefits from using the Creditworthiness Assessment Tool?

Banks and other financial institutions that consider credit applications need to analyse their clients' creditworthiness in order to evaluate their own risks and make a right decision. Companies planning investments or looking for new business partners should estimate whether they may trust their counterparts.

What differs the Creditworthiness Tool from standard assessment methods?

In many cases it is difficult to collect exact and reliable data on client's financial performance, credit history etc, because information may be unavailable, obsolete, or even deliberately distorted. Our tool allows you to make confident decisions regarding your potential borrower's creditworthiness even if you have some uncertain and fuzzy information.

How does the Creditworthiness Tool work?

A potential borrower is evaluated against a set of criteria describing general presentation and financial performance of his business, such as profitability, liquidity, credit history, or management independence.

Input information may be presented in the form of numerical ratios, if the exact data are available (e.g. Net Income or Assets to Liabilities Ratio), or as fuzzy verbal descriptions (e.g. Credit history is poor or Management independence is rather high than low). The information is then processed using fuzzy logic, and the final decision regarding the credit - positive or negative - is recommended.

The system has learning capabilities - it automatically adapts its decision making rules based on real credit-return practice of each particular credit organisation.

What is fuzzy logic?

A mathematical theory that allows to solve problems using fuzzy, uncertain, approximate data. Fuzzy logic is widely used for decision making in different areas where uncertain information may be involved - financial, economic, technical etc.

In fuzzy logic information may be presented as linguistic variables - verbal descriptions that do not use any numbers, e.g. Very high, Rather good than poor, Anyway negative, or even Unknown. Such variables, as well as any available exact data, are converted into special fuzzy numbers described by their membership functions. The final decision is then interpreted into a verbal description and some numeric ratios, e.g. 'Decision regarding the credit should be positive, creditworthiness ratio estimation 0.78, the risk of wrong decision 16%'.

What are hardware and software requirements to install the Creditworthiness Tool?

The Creditworthiness Tool may be used on any computer with Microsoft Excel 2000 or a higher version. Solver add-on must be installed in Excel, and macros execution must be allowed.