The Five C's

Axia College Material
Appendix E

The Five C’s Worksheet

Directions: Identify the following factor descriptions to their corresponding C of credit.
The five C’s are listed below:

• Capacity • Capital • Collateral • Character • Conditions

|Condition |Which C? |
|Your household cash flow helps to determine this C: |Your household cash flow helps to determine your capacity. |
|Under these __________, you may still be approved with a cosigner |Under these conditions, you may still be approved for credit with a |
| |cosigner. |
|This demonstrates how much your assets are worth. |Capital is when a lender is interested in your household’s net worth. |
| |If your assets are greater than your debt, lender’s consider |
| |liquidating other assets, if necessary to repay the loan. |
|Using your car or house as a promise to pay |Using your car or house as a promise to repay your loan is called |
| |collateral. |
|This makes you a better credit risk to the lender |Collateral ( house or car) will also make you a better credit risk to|
| |lender’s. The more valuable the collateral, the better the lender |
| |likes it.