Credit - Understanding Credit HACE 3110 Todays Presentation...

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Understanding Credit HACE 3110 Today’s Presentation z Introduction z How lenders evaluate you as a credit risk z How much credit is “too much” z Types of credit z Sources of credit z Managing debt How Lenders Decide if You’re Creditworthy z The 5 C’s of credit Character Capacity Capital Collateral Conditions
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The 5 Cs of Credit z __________: The borrower’s reputation Today, based largely on the repayment history in one’s credit report/score; stability (how long at one address and in your current job) z _______________: A borrower's ability to repay a loan What is your income relative to your consumer debt? The 5 Cs of Credit z Capital: Financial assets or the financial value of assets, such as cash Do you have a down payment? z Collateral: Properties or assets offered to secure a loan or other credit The 5 Cs of Credit z Conditions: For example, the interest rate and amount of principal
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Completing a Credit Application (Car loan) z Name z Social Security number z Date of birth z Current/previous addresses z Current/previous employment z Income sources z Total gross income z Information on existing credit accounts Credit Bureaus z Private, for-profit companies that collect information about your credit transactions and compile them into a report Whether lenders report information and what they report to credit bureaus is up to the lender. z
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Credit - Understanding Credit HACE 3110 Todays Presentation...

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