4 Cs OF CREDIT Definition

Bookmark and Share

4 Cs OF CREDIT are the four primary considerations that will affect a lenders decision to approve or decline your loan application. Known as the 4 C's of credit:

  1. Capacity - what is your ability to repay the loan? Do you have a job or another income source? Do you have other debts?
  2. Character - will you repay the loan? Have you used credit before? Do you pay your bills on time?
  3. Collateral - if you fail to repay your loan, is there something of value that you agree to forfeit? For example, if you are buying your first car, it could be used as collateral to insure that you will repay the loan. If you default, you lose your car.
  4. Capital (accumulation) - what are you worth? Do you have other assets, such as a savings account, car, or certificate of deposit that could be used to repay the debt?

Learn new Accounting Terms

ABM see ACTIVITY BASED MANAGEMENT.

ADJUSTMENT can be either: 1. an increase or decrease to an account resulting from ADJUSTING ENTRIES; or, 2. changing an account balance due to some event, e.g., adjustment of an account due to the return of merchandise for credit.

Suggest a Term

Enter Search Term

Enter a term, then click the entry you would like to view.