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).
References in periodicals archive ?
Because we feel comfortable working with that customer, we can expand our business with that customer," said Bell, who related that one of the five Cs of credit is Character.
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?
NACM's Principles of Business Credit Firsts character as the first of the Five Cs of Credit.
The Five Cs of Credit provide the credit manager or analyst with a framework for conducting a controlled investigation process and, therefore, deliver a credit evaluation that considers each component of credit risk associated with credit approval.
For the purposes of our discussion here, we will examine each of the traditional Five Cs of credit.
In fact, his writing inspired me to think about the similarities between the five Cs of Credit and his nine Cs of Leadership.
They were asked if they used any or all of such methods as the Five Cs of credit, credit scoring, financial statement analysis or if they used another method to decide to whom to grant credit.