What Are The ?
Five C’s Of CREDIT?
CONDITION CAPITAL
CAPACITY CHARACTER
COLLATERAL
The 5 C’s of credit is a system used by lenders to gauge the creditworthiness of potential borrowers.
CHARACTER Sometimes called credit history, the first C refers to a borrower's reputation or track record for repaying debts.
CAPACITY Measures the borrower's ability to repay a loan by comparing income against recurring debts and assessing the borrower's debt-to-income (DTI) ratio.
CAPITAL Down payments indicate the borrower's level of seriousness, which can make lenders more comfortable in extending credit.
COLLATERAL Any personal asset that the borrower pledges in order to support the loan. It acts as a lender’s back up in case you abscond or are genuinely unable to repay your loan.
CONDITIONS The conditions of the loan, such as its interest rate and amount of principal, influence the lender’s decision to finance the borrower.
80% 60%
% 30%
Conditions can refer to how a borrower plans to use the money.
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