Determining the Credit Rating and the Maximum Amount of Bank Loan for the Household Debtor

Abstract

First, the present paper develops a methodology for establishing the credit rating for a household debtor. The methodology consists in establishing the quantitative and qualitative indicators, setting the scores for each indicator and determining the credit rating category for the household debtor that apply for a loan from a bank. Second, other issues addressed in the paper are establishing the source of the loan repayment for the household debtor and determining the maximum amount of bank loan for the household debtor based on the information obtained from the analysis of credit rating. Finally, using the methodologies obtained in the paper, it is presented a comparative case study for three household debtors.

Keywords: Credit rating, Bank evaluation of the household debtor, Annuity, Maximum amount of bank loan, Degree of indebtedness.