{"id":157,"date":"2015-01-09T13:25:10","date_gmt":"2015-01-09T13:25:10","guid":{"rendered":"http:\/\/blogs.haverford.edu\/mi3\/?p=157"},"modified":"2023-08-08T16:33:03","modified_gmt":"2023-08-08T16:33:03","slug":"lfa-summit-2014-reading-critical-underwriting-documents","status":"publish","type":"post","link":"https:\/\/blogs.haverford.edu\/mi3\/2015\/01\/09\/lfa-summit-2014-reading-critical-underwriting-documents\/","title":{"rendered":"LFA Summit 2014: Reading Critical Underwriting Documents"},"content":{"rendered":"
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Xizi (Daisy) Yuan ’17 Discusses Information in Credit Reports, Pay Stubs and Bank Statements Used in Standard Loan Applications<\/h2>\n

Two years ago, the students of the\u00a0Haverford Microfinance Consulting club (HMFC) pivoted toward a focus on financial access issues here in the US and began considering the possibility of providing financial services to the local Philadelphia community. The\u00a0development of this\u00a0strategic direction has been facilitated by their engagement\u00a0with\u00a0Lend For America<\/a>, an organization devoted to support campus microfinance organizations.<\/p>\n

In November 2014, MI3 supported 5 students from HMFC to travel\u00a0to San Fransisco for the annual Lend for America Summit to help the group in its efforts to provide funding for local entrepreneurs as a Trustee with\u00a0Kiva Zip<\/a>.<\/p>\n

Summit participants included student microfinance groups from campuses across the US. The 5 students attending were Exec Dir Kayoung Lee (’16), Com Dir Jenna Kowalski (’17), Xizi (Daisy) Yuan (’17), Sitao Guo\u00a0(’18) and Siyan Wang (’17).<\/p>\n

Below Xizi (Daisy) Yuan\u00a0’17 discusses what information can be gleaned from\u00a0credit reports and bank statements to better assess clients ability and willingness to pay back a loan.<\/p>\n

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In our work with Kiva Zip to underwrite a small loan, we will need to evaluate a client\u2019s current financial status. Besides application and dialogues with the client, three official documents, credit report, pay stubs and bank statements are usually taken into consideration as an objective and quantitative measurement of the business income.<\/p>\n

(Kiva Zip’s focus is on character loans and Trustees are not required or expected to access potential client’s\u00a0credit reports. However, it is important to understand standard practices in the field, their advantages and disadvantages – Prof Mudd)<\/p>\n

Credit Reports<\/strong>:<\/p>\n

Credit reports give MFIs a general idea of the client\u2019s past borrowing behavior. A credit report consists of 4 components,<\/p>\n