Money | Debts | Financial Freedom

Consumer Credit Repair: The 5 C’s

If you’ve been trying to figure out how to do consumer credit repair, there are five major C words to lenders. Those major areas are character, capacity, capital, collateral and conditions.

Character

Your financial trustworthiness is character. It’s great if a lender knows you or your family personally. This is more often determined by your credit score. Whether you’ve made payments on time can play a big part here.

Your credit report will show 30, 60 and 90 day delinquencies. Credit card companies are often the most aggressive about reporting. As you could guess, negative entries count against your credit score. You’ll want your report to show all accounts in good standing for working to repair consumer credit.

Capacity

Capacity means you have enough cash flow to handle the debt you’re seeking. They look at how much money you have coming in each month as well as how many expenses you have. Lenders want to make sure you have enough money at the end of the month to make your payments.

Capital

Capital is your net worth. Even if you’re making plenty of money each month, if you have way more debt than you have assets, you’re a bigger lending risk. Having more assets shows you’re worthy of more credit.

Collateral

Collateral is something to secure the debt. Typically, loans are secured by property such as real estate or vehicles. If there’s something to get back should you default on the loan, there’s less risk to the lender.

Conditions

Conditions are actually market and economic conditions. With the fall, consolidation, bail out, etc of many large financial institutions, lending guidelines have become tighter.

Smaller concerns such as your local banker’s mood that day also fall into this group. While we’d like to think your banker is always going to be professional, he’s human too.

To repair consumer credit, focus on the five Cs: character, capacity, capital, collateral and conditions.

Find out how to do your own credit repair without an agency. Visit www.creditrepairsecrets.org for free credit help.

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