First Union Bank uses a credit$-$scoring system to evaluate most consumer loans that amount to more than $ $5,000.$ The key factors used in its scoring system are found at the conclusion of this problem.

The Lehman family has two wage earners who have held their present jobs for $18$ months.

They have lived at their current street address for one year, where they rent on a six month lease.

Their credit report is excellent but shows only one previous charge.

However, they are actively using two credit cards right now to help with household expenses. Yesterday, they opened an account at First Union and deposited $$500.$ The Lehman family have asked for a $$7,000$ loan to purchase a used car and some furniture. The loan is an adjustable rate loan with monthly installments of $$500$

The bank has a cutoff score in its scoring system of $300$points.

Would you make this loan for two years as they have requested?

Are there factors not included in the scoring system that you would like to know more about?

What would be some of the early signs of financial distress that the bank should monitor

Please explain.

Factors for predicting Credit Quality Point Value

Customers Occupation or line of Work

Professional or business executive $100$

Skilled worker $80$

Clerical worker $70$

Student $50$

Unskilled worker $40$

Part$-$time worker

Housing Status

Owns home $60$

Rents home or apartment $40$

Lives with friend or relative $20$

Credit rating

Excellent $100$

Average $50$

No record $20$

Poor record $00$

Length of time in current job

More than one year $50$

One year or less $20$

Length of time at current address

More than one year $20$

One year or less $10$

Telephone at home

YES $20$

NO $00$

Number of dependents reported by customer

None $30$

One $30$

Two $40$

Three $40$

More than Three $20$

Deposit Account held

Both checking and saving $40$

Savings Account only $30$

Checking Account only $20$

None $00$

FIRST UNION SCORING DECISION MAKING MATRIX

$280$ points or less

REJECT

$290-300$ points

Approve with caution

Extend credit up to $ $1,000$

$310-330$ points

Approve

Extend credit up to $ $2,000$

$340-360$ points

Approve

Extend credit up to $ $3,000$

$370-380$ points

Approve

Extend credit up to $ $4,000$

$390-400$ points

Approve

Extend credit up to $ $6,000$

$410-430$ points

Approve

Extend credit up to $ $10,000$

Over $440$ points

Approve

Extend credit over $ $10,000$

POINT AND $ AMOUNT $$ Decision Table