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Apply the Four Cs

When you ask for a loan, your lender will evaluate these main factors to decide if you are a good risk and can pay back the loan.


What is it? Your present and future capacity to make your payments on time. 

Questions you may be asked when you apply for credit.

How long have you been in your job?

How much do you make a month?

What are your monthly expenses?

Why does it matter to me?

Your lender would like to see that you have had the same job, or the same kind of job, for at least one year. 

Your bank will compare how much you owe and your monthly expenses with your monthly income.  


What is it? Your savings and other goods that can serve to secure a loan.

Questions you may be asked when you apply for credit.

How much money do you have in your checking and savings accounts?  

Do you own a house? 

Do you have investment accounts or other property (for example, a car)?

Why does it matter to me?

Lenders want to know the total value of your assets. Assets are things you own and that have a financial value.  

Positive net assets show that you can manage your money.


What is it? How you have paid your bills or debts in the past.

Questions you may be asked when you apply for credit.

Have you had credit before? 

How many credit accounts do you have? 

Have you ever been denied credit?

Have you ever filed for bankruptcy?

Do you have any pending judgments, had property repossessed or foreclosed?

Why does it matter to me?

If you have good credit, that is, if you have paid back your loans in the past, it will be easier to have your credit application approved.

A good credit history shows a lender that you can borrow money responsibly.

If you answered yes to any of these questions it may be more difficult for you to get a loan. However, some lenders will ask you what happened.  Depending on your situation, the lender might be willing to approve your loan. 


What is it? Real estate or other property you can offer to secure the loan

Questions you may be asked when you apply for credit.

Do you have property you can offer as collateral to secure the loan, other than your capacity to pay it back? 

Why does it matter to me?

You offer something to the lender as collateral, like a house, promising that it will serve as payment in the event you are unable to pay back the loan.