There are 4 basic criteria that lenders look at to see if they are going to give you the credit you are asking for. Here are 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? Have you held your job for a length of time? Do you have other debts?
2. Character–Will you repay the loan? Have you used credit before? Do you pay your bills on time? *This is where your credit report is going to come into play. Good credit means you get the loan, bad credit and you need to keep shopping. And oh by the way, if you aren’t approved there is another inquiry on your credit report that is going to drop your score unless you know how to shop for a loan!
3. Collateral–If you fail to repay the loan, is there something of value that you agree to forfeit? For example, if you’re buying your first car, it would be collateral to ensure that you will repay the loan. If you default, you lose the car.
4. Capital (accumulation)–What are you worth? Do you have other assets, such as a savings account, car, or share certificate you could use to repay the debt?
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