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Financial Services Underwriting Basics Understanding the 5 C’s of Credit!

1. Credit

  • What is your credit score?

  • How well do you manage the credit that is advanced to you?

  • Do you make your minimum payments on time?

  • Do you remain under 35% on your revolving credit trade line balances?

  • Do you have accounts in collections

2. Capacity

  • Your ability to repay loans

The most critical of the 5 C’s

  • Screening through application of debt service ratios

  • Careful review of your payment history on existing credit relationship

3. Collateral

  • The guarantee i.e. the vehicle, the property

  • The value, location, characteristics of the property

4. Character

  • The general impression of how trustworthy you are to repay loans

  • Your length of employment by component of borrowing character

5. Capital

  • The amount of money that you have invested in the property

May 15, 2012

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