angelface
Contributing Member
Cash: $ 7.90
Posts: 36
Joined: 03 Aug 2005
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| The 3 C's of Credit |
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which of the 3 C's of credit is the most important when applying for credit? http://www.credit-card-reports.com/applying-for-credit.html
it says in that article,
* Capacity. This is the ability of the creditor to repay the debt. Usually, creditors ask for information about employment like occupation, the duration of work, and earnings. Moreover, they want to know the expenses like number of dependents, payment for alimony or child support, if any, and amount of other obligations.
* Character. This is the willingness of repaying the debt. The creditors will look at the credit history like if there is money owed, frequency of borrowing, prompt payment of bills, and ability to live within his/her means. Moreover, they look for signs of stability such as residence mobility, house/home acquisition (rent or owned), and length of present employment.
* Collateral. This is the protection for the creditor if there is failure in repayment. The creditors want to know the things or property that a debtor may have that could be used to back up or secure the loan and other resources that he/she may have for the repayment of debt other than income (savings, investments, or property).
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Sun Feb 25, 2007 7:36 pm |
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efflandt
Senior Member
Cash: $ 80.45
Posts: 401
Joined: 25 Apr 2005
Location: Elgin, IL USA
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While source and amount of income and collateral may be important factors for certain types of loans, that does not even factor into the typical credit score.
For example FICO (myfico.com) considers in rough percentages:
35% credit history - do you pay on time?
30% how much of your available credit are you using?
15% length of history
10% new credit - shopping around too much raises the question, why?
10% other - like mix of credit types, etc.
I just saw an article that people who save their money and pay cash for everything may have a very hard time getting an auto or home loan. They may have good income and pay their utilities on time, but just have NO credit history.
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Sun Feb 25, 2007 9:29 pm |
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