Borrower reputation is important in assessing credit quality because

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Preservation of a good customer/FI relationship acts as an additional incentive to encourage loan repayment. A borrower's reputation can provide insight into their past payment behavior and overall creditworthiness, but it is not a foolproof predictor of future behavior. However, if a borrower has a good reputation and has built a positive relationship with the FI, they are more likely to prioritize loan repayment in order to maintain that relationship.

Borrower Reputation Is Important in Assessing Credit Quality Because