How do lenders assess applications?
Each lender has its own method for assessing a borrower’s creditworthiness but the use of the following “five C’s “ is a common approach for both individual and business loan applications.
- Character: This relates to your reputation, integrity and willingness to repay. A lender will check the loan repayment and savings history, stability (employment) and also your credit bureau history (see our recent article titled “Your Credit Report”)
- Collateral: A lender will be interested to understand what you intend to offer as “security” for the loan – and will consider the value, marketability, age, location and type of security (property/land/business stock/equipment etc.)
- Capacity: This relates to your ability to repay the loan. A lender will review your current (and proposed) income, current (and proposed debt) and living expenses.
- Capital: This is your financial position and includes the amount, and type, of your assets & liabilities
- Conditions: A lender will consider the purpose of the loan, the amount involved and interest rate
The First Point Group Advantage
We not only assist to find a loan that is in your best interests but also assess your application, using the above five C’s, before we submit the application to the lender on your behalf – ensuring the lender approves your loan as quickly and efficiently as possible.