5 Characteristics Of All Credit-12

No matter what type of loan you consider, all lending decisions are based on five, and only five, criteria. To the credit industry insiders, these are known as the Five C’s of Credit. They are: character, capacity, collateral, conditions and capital. I call them “All Star Credit” and use
a star to help us remember the five aspects.

The 5 C’s are time-tested criteria all lenders use (whether they know it or not!) to make their lending decisions. Everything that can affect the credit decision is encompassed in these five broad categories, so we’ll spend some time going over each one in detail. By understanding each of these from the lender’s viewpoint, you can anticipate your strengths and weaknesses as they may appear on your application to a potential lender.

You needn’t be perfect or even strong on each of the 5 C’s. Strength in one arena will support and substitute weakness in other areas. For example, excellent capital (what you own) can make up for inadequate collateral. If the lender’s conditions are ripe for lending, the particular
borrower almost doesn’t matter.

However, by applying my All Star Credit system, you will be able to make each point of this star shine as brightly as possible. In the next few articles I will delve into these five aspects in detail, first giving a short role-play to help you identify the factor. Then I will define the C, and show some examples of how to prove or demonstrate that factor. Finally, we’ll offer suggestions to build that element of your personal or your business’ credit.
I'll discuss more on tomorrow.Thank You.