Question

Joseph wants to take out a large loan. He has always paid his bills on time and has a fantastic credit score. He has been with his current employer for a decade and makes enough income that making loan payments should not be a problem. However, he is still denied the loan.
Considering the "3 C's," what was likely the problem that kept Joseph from getting the loan?

Answer 1

Joseph is probably denied credit due to his bad character, which is an essential element of the Three C's of Credit.

What are the Three C's of Credit?

To determine the credibility of a person for grant of a loan or an advance, a lender takes into consideration the Three C's of credit, which are as follows,

1. Character
2. Capacity
3. Capital or Collateral.

Collaterals or Capital help in determination of security of lender from borrower, in case when the borrower is unable to repay the credit. Capacity determines the ability to repay the credit.

Character, on the other hand, helps in determination whether the customer or the borrower's behavior, and the qualities of his or her character in the society.

Hence, the three C's of credit are explained above.

Learn more about the Three C's of Credit here:

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