What does the information from the credit report and loan application show lenders?
This information is often referred to as the three C’s of consumer credit: Character, Capacity and Capital/Collateral. Here’s what the three C’s show lenders: 1. Character: Your employment and living stability, or length of time in a job or at the same address, give lenders an idea of your personal character. Your financial character, or financial reputation, can be determined by reviewing your track record with your mortgage, credit card debt and bank or auto payments. 2. Capacity: Your current debt and the open credit available to borrow, along with your living expenses tell lenders how much debt you can manage according to your income and any other guaranteed income sources. 3. Capital/Collateral: Lenders use capital (down payment) or collateral (the value of equity or another asset) to decide the credit terms of the loan.
