Effective screening and information collection together form an important principle of credit risk management.

Question

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Effective screening and information collection is a vital component of credit risk management. It enables the lender to assess the borrower's creditworthiness and potential to repay the loan, reducing the risk of default and credit losses. As a result, effective screening and information collection are critical principles of a robust credit risk management system.

Effective Screening and Information Collection Together Form an Important Principle