C haracter - responsible attitude toward living up to agreements
Will the applicant be responsible and repay the loan?
C apacity – financial ability to replay with present income
Does the applicant have enough discretionary income to comfortably make the payments on the loan amount requested?
C ollateral – property pledged to assure repayment of loan
Will the loan be secured, or guaranteed, by collateral that can be used to repay the debt in case the borrower defaults on the loan?
Capacity, Character, or Collateral What is your salary? Capacity Do you have a savings account? Collateral Have you used credit before? Character How long have you been at your present job? Character Do you own your own home? Collateral What are your current living expenses? Capacity How long have you lived at hour present address? Character
Credit Advantages Disadvantages Helps people acquire valuable assets Helps people lead happier lives Helps people in emergency situations People may use too much credit in relation to their income Misuse of credit can lead to paying more to obtain credit in the future Misuse of credit can hurt the ability of people to obtain credit in the future