Credit and the Five “C”s of Credit: What Lenders Look For Information is based on text from Business and Personal Finance by the McGraw Hill Company

1. Character Will You Repay the Loan? –Are you trustworthy and stable: –Have you used credit before: –How long have you lived at your present address? –How long have you held your current job? –Request personal/professional references

2. Capacity Can you repay the loan? –What is your job, and how much is your salary? –Do you have other sources of income? –What are your current debts? –**These things will affect your ability to repay the loan.**

3. Capital What are your assets and your net worth? If you lose your job will you have enough money to repay the loan? –What are your assets (items of value your own)? –What are your liabilities (debts you owe)?

4. Collateral What if you do not repay the loan? –What assets do you have to secure the loan (car, boat, house, etc.)? –Do you have any other assets, such as savings or bonds?

5. Credit History What is your credit history? What does your credit report say about you? –Do you pay your bills on time? –Have you ever filed for bankruptcy?

Summary Creditors use different combinations of the Five Cs. Some set very high standards while others will restrict the types of loans offered.