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

Management of your credit is
essential to building wealth!

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