Module 5 Short Answer (2 Marks)

Angela and Ron are each applying for a personal loan with Toowoomba Bank. The bank uses a credit scoring model to determine whether to extend the loan. The accept/reject decision is based on the following:

Score Decision

30 or above Approve

29 or below Reject

Populate the table using the information below, by determining a score for each of the 6 decision criteria and calculating the total credit score for Angela and Ron. Indicate in the Decision row whether their loan application is approved or rejected. (Copy and Paste the Table into the Answer Panel and fill in the relevant blank cells)

Angela: Angela has run a convenience store for two years. She is separated from her husband, has two school-aged children, owns a car and owns a house, where she has lived for four years. Her Credit report is excellent. She has one credit card and is prompt in making all payments before the due date, but she does not have an account with Toowoomba bank.

Ron: Ron is a plumber. He has been employed by XYZ Civil Engineers for the past 6 months. He lives in a rented house and has been there for 4 months. Ron has an average credit report. Ron does not have a bank account with Toowoomba bank, but does have one credit card.

Scoring criteria	Points	Angela	Ron
Length of employment
More than 3 yrs	10
1-3 yrs	7
Less than 1 yr	4
Applicants length of time at current address
More than 3 yrs	10
1- 3 yrs	7
Less than one year	4
Applicants current residence
Home owner	10
Renting a unit/home	5
Living with friends/relatives	2
Credit advantage report
Excellent	10
Average	7
Below average	3
Deposit account with bank
Yes	5
No	2
Active credit cards
One card	5
Two cards	3
More than 2 cards	2
TOTAL
Decision