![]() Using specifics and staying away from adjectives in the writing can help credit memos be more effective. An automated credit analysis solution that can create customizable credit memos can also help credit unions incorporate four effective credit memo traits: Templates are critical for efficiency and effectiveness in writing credit memos, according to Alison Trapp, Abrigo’s Director of Client Education. “Everyone knows where to look for a certain piece of information,” she says. Not surprisingly, many bankers find the task to be a difficult one. In addition, all of this data collected during the loan application and credit analysis should be put together in a way so that credit reviewers or supervisory agencies are able to reach the same decision the credit union did and access the supporting documentation. This information will then be used for the initial loan decision as well as for modifications, renewals, or annual loan reviews later on. Lenders and credit analysts take member information, financial ratios, any global cash flow analysis, the assigned risk rating, proposed loan pricing, and terms of the proposed loan, and must organize all of this into a cohesive credit memo. ![]() At the same time, this document can become extremely complex and large because it has a lot of data coming from various sources. The loan committee uses the credit memo in deciding whether to approve the loan, so the lender wants to put forth an accurate and complete picture of the member - not only for the member’s sake, but also for the credit union’s risk management. Writing an effective credit memo is so important to the lending process. ![]() However, lenders, credit analysts, and other staff frequently seek tips for writing better credit memos. Why is writing effective credit memos so vexing? Given that a credit memorandum is one of the most critical documents in the life of the loan, it would seem like a straightforward process.
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