Main factors examined for granting credit

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Presentation transcript:

Main factors examined for granting credit

Main Factors Examined for Granting Credit The Three C’s of Credit: Character Capital Capacity

Main Factors Examined for Granting Credit continued Character is Honesty to pay a debt when it is due. How past debt obligations were handled. Capacity refers to how much debt can comfortably be handled. Capital is current available assets that could be used to repay debt if income was to become unavailable.

Main Factors Examined for Granting Credit continued Credit Application: Is a form used by lenders to obtain information from applicants in order to make a decision about granting credit. Should be filled out completely, accurately, and honestly. Requires signature of applicant, which indicates provided information is true.

Main Factors Examined for Granting Credit continued Credit data make up the information that applicants provide on credit applications. Documentation of credit data may be verified by: Employers (former and current) Type of data: Employment dates and salary Financial institutions Type of data: Saving or checking accounts Personal references Type of data: Manner how personal business is conducted

Main Factors Examined for Granting Credit continued Information provided by Credit Bureaus Credit bureaus sell lenders credit information about credit users such as debt records, payment history, and if any action has been taken to collect overdue bills.