The Five Cs of Credit
and Why it Matters
What Are the Five Cs of Credit?
The five Cs of credit is a set of criteria used by lenders to gauge the creditworthiness of potential borrowers. This type of approach weighs five different characteristics of potential borrowers and conditions of the loan, to help predict the chance of potential default and overall risk or loss for the lender. The Five Cs are: Collateral, Credit, Capacity, Capital and Character.
Why is it Important to Use the Five Cs of Credit?
Evaluating a borrower’s creditworthiness based on the Five Cs of Credit is important because it gives the lender a better overall picture of the borrower and their ability to pay off the loan. It also takes into consideration the more “personal” side of financing by considering the borrower’s character, as opposed to simply looking at past credit history and collateral. For example, if the credit check reports a default payment, it could have been due to unique or rare circumstances, such as an illness or divorce. These types of questions will help lenders understand the borrower’s credit – looking back to the credit history and looking forward to the client’s future capacity.
Save Time: Ownest’s Software Automatically Calculates the Five Cs
One of the biggest challenge when it comes to financing is knowing the actual creditworthiness of a potential purchaser or borrower. For example, if someone is interested in purchasing a home, the sales associate spends a lot of time with the customer during the sales journey. Waiting for a mortgage approval can take 7 – 10 days, and in the meantime, your sales team is spending valuable time building a relationship with a client who may not be approved for financing. Wouldn’t it be nice to know this information at the beginning of the sales journey?
Ownest’s Pront-O app instantly pre-qualifies and intelligently screens
applicants based on their actual borrowing ability.
The software performs a soft credit check using the Five Cs of Credit, then sorts and ranks the leads by summarizing the information in an easy-to-read stoplight snapshot (green, yellow, red rating system). This data empowers our affiliate and lender partners with key insight and visibility of the borrower’s overall credit profile – faster and more accurately than any other software on the market – so you know where you’ll get the best return for your sales efforts.
How Much Time and Money Will You Save?
Whether you’re a lender or a company that offers financing for your products, Ownest software can provide valuable insight and streamline your sales process. Pronto’s pre-qualification capabilities are just one of the many features of our revolutionary software. Contact us to schedule a demo today!