Instructions: Click each “C” to learn more.
When lenders evaluate credit history, they look at stability — for example, how long you’ve lived at your current address, how long you’ve been in the military, or how long your spouse has held his or her job, and whether you have a good record of paying your bills on time and in full. If you or your spouse own a business and need a loan, the lender may consider your experience and track record in your business and industry to evaluate how likely you are to repay.
Collateral refers to any asset of a borrower (for example, a car or home) that a lender has a right to take ownership of and use to pay the debt if the borrower is unable to make the loan payments as agreed.
Some lenders may require a guarantee in addition to collateral. A guarantee means that another person signs a document promising to repay the loan if you can’t.
Some lenders develop their own loan decision “scorecards” using aspects of the five C’s and other factors. Example: borrower’s credit used vs. credit available.
Click the Next button to learn about your credit score.