How Lenders Make Credit Decisions

When you apply for credit, the lender will review the “Four Cs” to decide whether you are a good credit risk (whether you are likely to pay back the loan). The Five “C’s” of Credit Include: 1. Capacity – Your present and future ability to meet your payments. 2. Capital – The value of your assets and your net worth. 3. Collateral – Property or assets offered to secure the loan. 4. Character – How you’ve paid your past bills or debts. Banks will use credit reports to obtain character information. 5. Conditions – The lender will also consider the overall economic climate. Free Annual Credit Report The Fair Credit Reporting Act (FCRA) allows consumers to view their credit reports on an annual basis through the national credit reporting agencies of Equifax, Experian and TransUnion. Reviewing your free credit report on an annual basis will help reduce the impact of fraud and identity theft on your Social Security Number. Visit www.annualcreditreport.com to view your free annual credit report or call 877.322.8228 for more information. Additional Resources Federal Deposit Insurance Corporation (FDIC) Division of Supervision & Consumer Protection 2345 Grand Boulevard, Suite 1200 Kansas City, Missouri 64108 Phone: 1.877.ASK.FDIC (1-877-275-3342) Email: consumer@fdic.gov www.fdic.gov U.S. Financial Literacy and Education Commission The website, www.MyMoney.gov is the U.S. Government’s website dedicated to teaching all Americans about financial education. Whether you are planning to buy a home, balancing your checkbook or investing in your 401k, the resources on MyMoney.gov can help you. Throughout the site, you will find important information from 20 Federal agencies. Phone: 1.888.My.Money (1-888-696-6639)