One of the traditional approaches to credit risk management whereby the credit decision is handled by the local or branch lending officer or relationship manager. By nature, an expert system is based on personal expertise, subjective analysis, and weighting of specific influencing factors that determine whether to grant credit or not.

Expert systems are uncountable, depending on the key factors used. However, the most common expert system is the so-called five Cs of credit with which the expert analyzes five factors, assigns subjective weights to each, and bases the credit decision on the overall result. Furthermore, the level of interest rates can also be a good indicator to the return on a loan. When interest rates are low, the expected return would be positively correlated with rate increases. However, when interest rates are high, the expected return would have a negative correlation with rate increases.