Five Cs of credit

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Five Cs of credit

Five characteristics that are used to form a judgment about a customer's creditworthiness: character, capacity, capital, collateral, and conditions.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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).
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
In the world of finance, there are the five C's of credit analysis.
Generally speaking, a bank's analysis will include five areas of focus, often referred to as "The Five C's of Credit." These include character, capacity, capital, collateral and conditions.<br />&nbsp;<br />Character<br />Character refers to the owner's industry experience and personal credit history, including a demonstrated willingness and ability to repay debts.
A lot of it's about relationships, the five C's of credit, and do your customers have the ability and willingness to pay.
Think like a lender When discussing a line of credit or a loan, it is wise to prepare answers to the following Five C's of Credit: Capacity --experience and ability to run a business Cash Flow--does business make enough money to repay Capital
Typical qualifying standards for commercial lending revolve around the Five C's of credit: character, capacity, capital, condition, and collateral.
“For decades banking and investment professionals have used the Five C's of Credit Analysis to guide their business lending decisions.
Beretz encourages them to first become familiar with what are called the "five C's of credit." These are character, capacity, capital, conditions and collateral.
In any event, Velotta stresses the five C's of credit: cash flow, collateral, credit history, capital injection and character.
Credit Management 101, teaches that the best way to shrewdly evaluate credit and anticipate problems is by adhering to the basics, otherwise known as the Five C's of Credit.
Such a customer unwittingly violates the "character" requirement in the five C's of credit and should be referred to legal counsel for litigation.
The Five C's of credit were combined with the Global C's--country, currency and culture--to identify risks worldwide.