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From the Experts at

The 6 C’s of Credit

by Lucy Lazarony

6 C's of Credit

Wondering if you will qualify for the loan or credit account that you desire?

Think like a potential lender and consider how well you meet the six C’s of credit, key credit criteria that lenders use when assessing loan and credit applicants.


You have good credit character when you live up to your financial and credit agreements. Paying bills on time and meeting financial obligations are signs of good character.

Your credit score and your credit history are good ways for a lender to learn about your character or credit reputation and how well you pay your credit obligations.

That’s why it’s a good idea to check your credit reports and your credit score before you apply for credit. You can get your credit reports for free once each year from all three credit reporting agencies.

For your free credit scores, sign up for’s free tools. You’ll receive two free credit scores plus expert tips and customized advice to help you build your credit.


Capacity is your ability to repay a loan or other financial agreement. A potential lender wants to see that you will have enough cash left over after paying your fixed monthly expenses to repay a new credit or loan account.


A potential lender also will assess your capital. Wondering if you have any? Subtract all your debts from your assets, including any property that you may own, and this is your capital.  Lenders or creditors like to see that you have enough capital to handle another loan or credit account before approving you for new credit.


Lenders look at conditions such as the stability of your employment, your other debts and financial obligations, and how often you’ve moved in the past year when considering whether to approve you for a loan.


Do you have collateral?  Collateral is any property or possession that can be used as security for a payment of a debt.  If you are unable to repay a debt, your collateral may be sold or repossessed to repay your financial obligation.

Cash Flow

Do you have adequate cash flow to repay a new loan?  How much income do you have coming in each month?  And how much of that income are you already paying out each month for your other bills and expenses?  A lender or creditor wants to make sure you have enough cash flowing your way each month to pay for a new credit obligation.

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