02 — Capability · BC-1720.20
Credit Decisioning & Underwriting
Decide consistently and defensibly whether to lend, how much and on what terms, using scores, policy rules and analyst judgment within delegated authority, and keep revolving limits right as borrowers change. Measuring portfolio credit risk and validating the bank's models sit with prudential risk.
- Credit Underwriting
- Loan Decisioning
- Credit Approval
In scope
- Application scoring and automated decision rules for loans, revolving lines and cards
- Consumer underwriting using affordability measures such as DTI and LTV
- Commercial credit analysis, risk grading and approval authority
- Credit line increases, decreases and periodic limit reviews
Out of scope
- Portfolio credit risk measurement (see BC-1780.10)
- Validating credit scoring and decision models (see BC-1780.50)
- Building machine learning models as a discipline (see BC-770.20)
- Enterprise risk appetite and limits (see BC-130.10)
Realized by · 0
- No product in the catalog yet.
Used in · 1
Build it · 0
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Decomposes into · 5
- BC-1720.20.10Application Credit ScoringScore each application against bureau and internal data with approved scorecards and rules, and return an approve, decline or refer outcome.
- BC-1720.20.20Consumer Loan UnderwritingAssess a person's ability and willingness to repay with debt-to-income, loan-to-value and credit history, and set conditions for approval.
- BC-1720.20.30Commercial Credit AnalysisAnalyze a business borrower's financial statements, cash flow and industry, assign a risk grade, and write the credit memo for approval.
- BC-1720.20.40Credit Approval AuthorityRoute each credit decision to someone with the authority to approve it, record exceptions to policy, and send adverse action notices when credit is declined.
- BC-1720.20.50Credit Line ManagementIncrease, decrease and review limits on credit cards and other revolving lines as borrowers' behavior and circumstances change, and tell them of each change in time.