Refusing credit to a good moral risk with bad finances or in a poor economic environment
Some individuals have good records in loan repayments. These people are always credited with reasonable moral risks. They usually get their loans processed fast since they are known to be conscious of their financial positions if an individual with reasonable ethical risks but with bad finances or poor economic environment request credit. Financial institutions would start by thanking such a customer for his/her application.
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The message should then explain carefully by choosing the right words that would not discourage customers. For instance, “Thank you very much for your credit application. We shall do all we can to ensure that appropriate assistance is provided. We have crosschecked your financial information and found that your current asset to liability ratio is still less than our recommended 2:1. Therefore, in the best interest of both parties, we have no otherwise but to defer your credit until such other time in the future when your ratio will reach the stipulated value. Therefore, we kindly request that you understand our stand on this”.
Refusing credit to a bad moral risk
When dealing with people who are known to pose bad moral risks to credit, it is essential to start by thanking them for their applications; this helps establish confidence from customers. In the following paragraph, you should try to explain vaguely why the loan is delaying or refused. This is mainly because both of you recognize his/her bad moral risks. In the end, the loan is denied. Always encourage them to be optimistic about your institution even if they do not get the credit. For instance, “Thank you very much for your credit application. We shall do all we can to ensure that appropriate assistance is provided.
We are still crosschecking your financial information. We hope to get back to you as soon as possible. As our esteemed customer, we shall continue to provide for your financial needs. We ask for your patience as we determine whether you qualify for the credit. Thanks.”