The first “C” in the 5C’s of Credit is Character. It is one of the principles measured and used to approve or decline a request for credit. When you apply for credit the banker will ask you numerous questions, some of which are used to judge the strength of your Character and, along with using nine other principles, there is a decision as to either approve or decline the credit application.
What is Character?
Character is defined by the dictionary as “the aggregate of features and traits that form the individual nature of some person or thing.” A banker defines Character as “Will you make the payments when money is tight?” No matter how you define it, Character is being used as a measurement to make a decision on a loan or credit card application.
How is Character measured?
Your Character is being measured the moment you meet with the banker. Were you on time for the meeting? Did you smile when introducing yourself to the banker? Do you have the documents that will be needed to approve your request for credit? Are you dressed in appropriate attire? And then the questions for the credit application begin. How long have you lived at your current address? How long have you lived at your previous address? How long have you been at your current employment? What is your position at work? These actions and questions indirectly measure your Character.
While Character cannot be directly observed in and of itself during a credit interview, Bankers look at your behaviour during the credit application process to judge your Character. Building a good rapport with the banker is good way to demonstrate your character in a short period of time. Rapport is used to connect with people, and if they know, like, and trust you, then the “Does this person have good Character?” question is assumed to have an answer of “Yes”.
While it takes time to build good Character, built over countless decisions and actions that you have taken, when properly displayed, a banker will give the first “C” of the 5C’s of Credit a positive mark and you are well on your way to being approved for the credit that you have requested. The Character “C” is a good foundation to build on to make the approve/decline decision. While it is the first measurement used, Character is not the only thing that is looked at or measured.
What else is looked at?
There are nine other items that are looked at besides Character, which include the other 4C’s of the 5C’s of Credit (Capacity, Credit History, Capital, Collateral) and the 5H’s of Credit (Have you made your payments on time?, How much money do you owe?, How long have you had credit?, How much new credit do you have?, and How many types of credit do you have?). Taken into consideration as a whole, these 10 criteria are what the banker uses to make their decision to say approved or declined. You have opportunity to strengthen these areas once you know what the banker is looking at. I will continue to discuss each criteria in more depth in future blog posts.
You have more control over the credit application process and credit approval than you realize. When you know what is being looked at and what is being measured in the credit application and what is needed to get approved for credit, you are able strengthen these areas. This can be done before you meet with the banker to apply for credit. When you are able to give what the banker is looking for to them, it becomes easier to get approved for the credit you want at the interest rate you deserve. I was a banker for 10 years and have studied credit for an additional 10 years, and know how to get approved for credit. I can show you what you need to do given your specific individual credit circumstances. If you would like to work with me, please get in touch.