Show:
1st C
2nd C
3rd C
Tie Breaker
100
The 1st C of Credit
What is Capacity?
100
The second C of Credit
What is Character?
100
The 3rd C of Credit
What is Collateral?
100
What do the 3 C's of credit determine?
What is credit score?
200
What does Capacity mean?
Does the borrower have the ability to repay the loan?
200
What does Character mean?
Will the borrower repay the loan?
200
What does Collateral mean?
Is there a financial asset or piece of property that a creditor can take if the borrower fail to repay the loan?
300
What do they look at in Capacity?
Income, length of time at his/her current job, and how much debt the borrower already owe.
300
What do they look for in character?
Borrower's last bill-paying history, has he/she paid bills on time, Residence history, employment history.
300
What do they look for in Collateral?
Provides protection for the creditor if borrower does not repay loan, and creditor may reposses the collateral.
400
Why do they look for capacity?
They look for capacity so they know if the borrower will repay the loan.
400
Why do they look for character?
They look for character so they know they can trust the person to repay the loan.
400
Why would they look for a collateral?
They look for a collateral so the bank doesn't lose out on a loan.
500
What is the typical amount of income a business need to support every dollar of debt service?
$1.25 because it is a cushion for unexpected expenses or a downturn in the economy.
500
What are some things that are critically important?
Ones personal integrity and good standing.
500
What are some forms of a collateral that a bank can use for reforms?
Cash, Accounts receivable, inventory, and commercial real estate.