What are the 5 Cs of Credit?

The 5 Cs of credit are fundamental criteria used by lenders to assess the creditworthiness of borrowers. They include Character, which evaluates the borrower’s reputation and reliability; Capacity, assessing their ability to repay based on income and existing debts; Capital, examining the borrower’s assets and net worth; Collateral, referring to assets pledged as security for the loan; and Conditions, considering external factors like the economy and industry trends that may impact the borrower’s ability to repay. Evaluating these factors helps lenders make informed decisions about extending credit.

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