Five Cs of credit

Five Cs of credit

Five characteristics that are used to form a judgment about a customer's creditworthiness: character, capacity, capital, collateral, and conditions.

Five Cs of Credit

Five factors a lender considers when evaluating whether or not to extend credit to a potential borrower. Importantly, the five Cs of credit include both quantitative and qualitative measures. They are: character (or the borrowers' reputation), capacity (a measure of the borrower's ability to repay by comparing his/her debt service to income), capital available, collateral pledged against the loan, and the conditions of the loan (such as the interest rate, monthly payment, and so forth).
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If you will need financing, look at the five Cs of credit that your lender will be watching: character of the person; collateral; current economic conditions; capital; and capacity, which is the sufficient cash flow to carry a loan--do these things align in your favor?