Judgmental Credit Analysis

AAA

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.

INVESTOPEDIA EXPLAINS '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. Bond

    A debt investment in which an investor loans money to an entity ...
  2. Credit Analysis

    A type of analysis an investor or bond portfolio manager performs ...
  3. Credit

    1. A contractual agreement in which a borrower receives something ...
  4. Balance-To-Limit Ratio

    The amount of money you owe on your credit cards compared to ...
  5. FICO (Fair Isaac)

    A major analytics software company that provides products and ...
  6. Prime Borrower

    A prime borrower is considered likely to make loan payments on ...
Related Articles
  1. Investing Basics

    What Is A Corporate Credit Rating?

    Is the bond you're buying investment grade, or just junk? Find out how to check the score.
  2. Bonds & Fixed Income

    Corporate Bonds: An Introduction To Credit Risk

    Corporate bonds offer higher yields, but it's important to evaluate the extra risk involved before you buy.
  3. Markets

    What Is A Cash Flow Statement?

    Learn how the CFS relates to the balance sheet and income statement as a part of a company's financial reports.
  4. Bonds & Fixed Income

    An Overview Of Corporate Bankruptcy

    If a company files for bankruptcy, stockholders have the most to lose. Find out why.
  5. Investing

    What does investment grade mean?

    Credit ratings provide a useful measure for comparing fixed-income securities, such as bonds, bills and notes. Most companies are issued a rating based on their financial strength, future prospects ...
  6. Bonds & Fixed Income

    Advanced Bond Concepts

    Learn the complex concepts and calculations for trading bonds including bond pricing, yield, term structure of interest rates and duration.
  7. Personal Finance

    Looking To Clear Up Your Credit Report?

    If you look at your credit report you might see any number of various items that are harmful to your credit score, but you can learn how to remove them.
  8. Personal Finance

    How To Find A Job With Poor Credit?

    It's not legal for an employer to refuse to hire you for having bad credit, but he doesn't have to say that you weren't hired because of your bankruptcy.
  9. Credit & Loans

    5 Top Credit Karma Tools To Keep Your Credit High

    As if the free, no-strings credit checkup weren't enough, this site also gives you personalized feedback to make you a better money manager.
  10. Credit & Loans

    How Bad Is My Credit Score?

    You've seen the number, but what does it mean? Here's how to assess your credit score and get to a better place if needed.

You May Also Like

Hot Definitions
  1. Multiplier Effect

    The expansion of a country's money supply that results from banks being able to lend. The size of the multiplier effect depends ...
  2. Command Economy

    A system where the government, rather than the free market, determines what goods should be produced, how much should be ...
  3. Prospectus

    A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details ...
  4. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  5. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  6. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
Trading Center