five C's of credit definition

five C's of credit

Judgmental factors which (in theory) bankers use to evaluate the quality of a personal or small business loan application. First four of these are normally under the control of the applicant whereas the fifth is not: (1) Good reputation and track record (character) that indicates a willingness to meet one's obligations, (2) Stable and adequate capital base, (3) Capacity to generate cash flows adequate to cover debt-service, (4) More than adequate valuable assets for pledging as collateral, and (5) economic and other conditions conducive to the applicant's plans. In practice, however, the order of the importance of these factors often is: collateral, capacity, capital, conditions, and character.

five C's of credit is in the Banking, Commerce & Finance subject.

five C's of credit appears in the definitions of the following terms: character, character loan and ability to pay

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