Week 3 Discussion 1 FP101

Week 3 Discussion 1 FP101 - credit lender. If you cannot...

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When applying for credit you have to give out your personal information. This information is usually details about income, assets, and debts. Credit lenders are not only interdependent with your cash flow; they also take the “five C’s of credit” into consideration. The five C’s are listed as follows: capacity, capital, collateral, character, and conditions. Capacity is the lender’s determination of your ability to repay your debts. This is usually based on your income and your expenses. Capital is how many assets you have. If you have more assets than your debts, they consider that you could liquidate your assets to pay back the loan, if necessary. Collateral is a protection plan for the
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Unformatted text preview: credit lender. If you cannot pay your loan you will have to give them something valuable in place of repayment. Character tells the lender about your previous credit, employment, and education history. If your history is good than your lender assumes that you are less likely to default on your loan. Conditions are that if you do not have a sufficient history the lender may still approve you. The only way that the creditor will consider your loan is if you have a cosigner. A cosigner is someone that has a sufficient credit history that takes full responsibility for paying your loan if you default....
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This note was uploaded on 03/17/2012 for the course ALL all taught by Professor All during the Spring '10 term at University of Phoenix.

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