The 5 Cs of Lending

When applying for a loan, lenders review credit risk based on a number of factors, including credit/payment history, income, and overall financial situation. These “5 Cs” will help you to better understand what lenders look for when applicants apply for a loan:

  1. Credit history: Qualifying for the different types of credit hinges largely on credit history, credit score and character — the track record established while managing credit and making payments over time.
  2. Capacity: Lenders determine whether you can comfortably manage your payments. Your current and past income and employment history are good indicators of your ability to repay outstanding debt.
  3. Collateral: Loans, lines of credit, or credit cards you apply for may be secured or unsecured. With a secured product, such as an auto or home, you pledge something you own as collateral. The value of your collateral will be evaluated.
  4. Capital: While your household income is expected to be the primary source of repayment, capital represents the savings, investments, and other assets that can help repay the loan. This can be helpful if you lose your job or experience setbacks.
  5. Conditions: Lenders may want to know how you plan to use the money and will consider the loan’s purpose, such as whether the loan will be used to purchase or refinance a vehicle or home.

For complete mortgage loan program details and to find out if you qualify, contact us today at 888-488-3807 or go to