CreditWiz+ is very incisive. The credit may not have defaulted as of now, but if the operations are not healthy, CreditWiz+ will point that out. There are many illustrative examples. When Enron's financials were applied to the model, it classified it as a non-investment grade credit based on the December 1999 results. The international rating agencies did so almost two years later. We had similar startling results with WorldCom and Global Crossing.

An industrial group in South Asia defaulted in early 2003. A consortium of banks stood to lose a substantial sum of money. Many bankers were at a loss to understand as to how a "good" customer could have suddenly defaulted. When the financial statements of the borrower were subjected to the scrutiny of CreditWiz+, it became apparent that the group had been resorting to "creative accounting" and had used their balance sheet figures to borrow from banks far in excess of what would have been otherwise approved. It was these borrowings that had allowed the group to stay afloat. The software conclusively established that the group had been hovering in and out of the "default zone" since 1998! The red flag system also pointed out when and under what heads the books had been doctored.

The conventional parametric/credit scoring systems used by most banks for evaluation of credit risk have definite shortcomings, can be manipulated by dishonest borrowers and are not suited for today's complex situations.


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