Introduction
The borrow FHI is comprised of four categories that a loan assessor should consider when reviewing an application:
Risk (credit score and electoral roll)
Indebtedness (debt ratios and use of revolving credit)
Regular repayments (missed payments and defaults)
Legal action (county court judgments and insolvencies)
Risk factors
Each risk category is made up of two risk factors with a Red Amber or Green (RAG) status.
The Borrow FHI shows movement towards financial stress; the position worsens as the pie chart moves clockwise. Somewhere between the last two categories (regular payments and legal action) lies the referral for money advice.
RAG status
The risk factors have a RAG status. This influences the RAG status of the category:
Two greens = green
One or two amber = amber
At least one red = red
Scoring
Each risk category is worth 25 points. The maximum borrow score is 100. The risk category score is made up of top and bottom level risk factor scores.
Some risk factors are more important than others. Top level risk factors are scored 15, 10 and 5 points. Bottom level factors are scored 10, 5 and 0 points.
Next: Read more about the scoring system for the Borrow FHI.