11-70 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 is important because it influences how likely they are to repay their loans. Someone who has a history of making payments on time and maintaining good relationships with creditors is more likely to continue to do so in the future. Building a positive relationship between the borrower and the financial institution is also important because it leads to a higher level of trust and confidence between the two parties.

11-70 Borrower Reputation Is Important in Assessing Credit Quality Because