The Five C's in Lending

Did you ever hear about the 5 C's of lending? Most lenders use these five factors when considering a loan:

1. Character- An evaluation of your financial performance and management; your credit score.
2. Capital- This is your financial position; assets, liabilities, net worth and equity.
3. Capacity- Your ability to repay the loan, your debt ratio.
4. Collateral- This is what you offer the lender for security should you default or cannot repay the loan.
5. Conditions- These are things a lender may want of you to assure or encourage repayment of the loan.

Work on improving your weak C's so that you can improve your chances of getting what you want. Knowing what a lender expects before applying can only help your chances of getting the loan.