DEFINITION of 'Judgmental Credit Analysis'

A method of approving or denying credit based on the lender's judgment rather than on a particular credit scoring model. Judgmental credit analysis entails evaluating the borrowers application and using prior experience dealing with similar applicants to determine credit approval. This process avoids using any algorithms or empirical process to determine approvals.

BREAKING DOWN 'Judgmental Credit Analysis'

Often times, small banks will use judgmental credit analysis due to the fact that it would not be economical for them to develop a credit scoring system or hire a third party to establish credit scores. On the other hand, large banks often have more automated credit processes, due to the volume of applications they receive.

RELATED TERMS
  1. Credit Scoring

    A statistical analysis performed by lenders and financial institutions ...
  2. Bad Credit

    A qualification of an individual's credit history that indicates ...
  3. Credit Mix

    The types of accounts that make up a consumer’s credit report. ...
  4. Credit Utilization Ratio

    An input used in determining a person's credit score. It is the ...
  5. Credit Score

    A statistically derived numeric expression of a person's creditworthiness ...
  6. Credit Denial

    The rejection of a credit application by the prospective lender. ...
Related Articles
  1. Personal Finance

    What Do Credit Score Ranges Mean?

    Take a closer look at what credit scores in each range mean for your financial future.
  2. Personal Finance

    How Your Credit Score Compares to the Average American's

    While only a small percentage of Americans have terrible credit scores, a whopping 30% have poor or bad credit, according to the Consumer Financial Protection Bureau.
  3. Personal Finance

    What Credit Score Should You Have?

    We break down credit scores by age to see what your score should be and how it will affect your major purchases.
  4. Managing Wealth

    Can You Hit A Perfect Credit Score?

    Everyone wants a great credit score, but few know exactly how to achieve perfection. Find out how your credit score is kept and what it takes to reach a perfect 850 rating.
  5. Investing

    Millennials: Prevent a Bad Credit Score

    Here are five ways to help prevent getting a bad credit score that could affect future loan, credit card or mortgage approvals.
  6. Personal Finance

    10 Ways Advisors Can Help Clients Improve Credit Scores

    Properly managing credit scores can help get new loans and save a lot of money in the process.
  7. Personal Finance

    Do You Understand Your Credit Score?

    Most Americans don't really understand their credit scores. Find out what you need to know.
  8. Personal Finance

    Should Your Credit Rating Scare You?

    Take the mystery out of credit scores by learning the most important ways it can impact your life.
  9. Personal Finance

    6 Ways To Build Credit Without A Credit Card

    It's definitely possible – if a bit more complicated – to build a credit history without traditional credit cards. Just follow these steps.
  10. Retirement

    6 Methods to Maintain a Healthy Credit Score During Retirement

    Learn how to improve your credit score during retirement. Your credit score still matters in retirement, and these tips can give it a boost.
RELATED FAQS
  1. What are the biggest factors that can affect my credit score?

    A credit score is a numeric expression that helps lenders estimate the risk of extending credit or loaning money to people. ... Read Answer >>
  2. Why don't I have a credit score?

    Learn about some of the reasons why you might not have a credit score, and find out how you can build a good credit score ... Read Answer >>
  3. What's more important to lenders, my credit score or my credit report?

    Find out why lenders care more about your credit report than your credit score and why you should care more about your credit ... Read Answer >>
  4. Can a Best Buy credit card help you build credit?

    Learn about how using a Best Buy credit card responsibly can lead to a higher credit score and lower interest rates on mortgages ... Read Answer >>
Trading Center