The Six C's of Credit

How Do You Measure Up To These Criteria?

When a lender is considering whether or not you will qualify for the loan or line of credit for which you are applying, they will use these six criteria. Understanding how you measure up in each area will give you an idea of how easy securing your desired home loan with your desired mortgage rate will be. Here are the Six C’s Of Credit.

• Character: If you pay your dues on time and meet your other financial obligations, lenders will see that you have a good credit character. Your credit report will be a good indicator of your credit character, so check it in advance to see how you will look to lenders.
• Capacity: Your lender will need evidence that you will have the financial capacity to be able to comfortably pay your monthly dues without being strapped for cash.
• Capital: Before approving you for new credit, a lender will need to see that you have enough capital to handle it. To determine how much you have, subtract your debts from your assets (including property, investments, and vehicles).
• Conditions: The money in your bank account will not be the only thing your lender considers. They will look at how frequently you have moved in recent years, your other debts, your employment stability, and more.
• Collateral: If you have a property or personal possession that can be used as security for your debt, your lender will feel more comfortable knowing they could repossess it if you were able to meet your financial obligation.
• Cash Flow: To ensure you will be able to make continued payments, your lender will evaluate how much income you have coming in and how much of it is already being designated elsewhere.