Credit analysis is conducted through several steps, including:
1. Data Collection: Gathering relevant financial statements, credit reports, and other necessary documents. 2. Financial Statement Analysis: Analyzing the borrower’s financial health using ratio analysis, trend analysis, and comparative analysis. 3. Credit Scoring: Using credit scoring models to assign a score based on various financial indicators. 4. Risk Assessment: Evaluating the potential risks associated with extending credit and determining the borrower’s risk profile. 5. Decision Making: Based on the analysis, deciding whether to approve the credit application, and if so, determining the terms and conditions.