4 Cs OF CREDIT Definition
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:
- Capacity - what is your ability to repay the loan? Do you have a job or another income source? Do you have other debts?
- Character - will you repay the loan? Have you used credit before? Do you pay your bills on time?
- 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.
- 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
BROWN BOOK is industry slang for Development of the Oil and Gas Resources of the United Kingdom; an annual report.
CALLABLE BOND is a bond the issuer has the right to pay off at issuers discretion.
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