When a company
is deciding whether or not to loan you money, yes,
they'll be looking at your FICO score, but they'll
also be looking at what's called...
The Five
C's of Credit:
|
Character: |
How
responsible do you look? They'll
look at everything from your FICO score
to your employment history to what you
are wearing. This one can be
subjective. It's, basically, the
overall impression you make. So,
take out the nose ring when you meet
with the loan officer! |
|
Capacity: |
Are you
financially overextended? Have you
borrowed more than you can pay back?
They'll look at your income versus debt
on this one. Maxed out credit
cards will really hurt you here. |
|
Capital: |
How
much do you have in the bank? What
does your portfolio look like?
(Your "portfolio" is what you own in the
way of stocks, bonds, mutual funds,
etc.) They'll also look at your
retirement accounts (if you have any).
They want to know how much money you
have in case you get into trouble - like
losing your job. |
|
Collateral: |
What do you
own? It's usually property that
they are interested in. They want
to know what they can take away from you
if you don't pay them back!
(Ouch.) |
|
Conditions: |
What's your current economic status?
Do you have a good job that you've been
at for awhile? Is it a new job?
Is it stable? Are you out of work? |
Really,
companies want to loan money to people who can
pay them back. I know, that's a wild idea!
But, they'll make so much money off of you in
interest... They'd like to avoid the pain
of trying to get their money back out of you the
hard way like trying to get your house.
|
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