5 Cs of Credit

The 5 Cs of credit are a framework used by lenders to assess a borrower’s creditworthiness. They include Character (borrower’s reputation and credit history), Capacity (borrower’s ability to repay based on income), Capital (borrower’s financial assets and investments), Collateral (assets offered as security), and Conditions (economic and industry factors influencing repayment). Lenders evaluate these factors to make informed lending decisions.