Consumer Credit Repair: What They’re Looking For
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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 is the ability to make the payments. It’s essentially your cash flow. If your expenses are close to your total income, they won’t want to lend you more money because you won’t be able to pay it back.
Capital
Your net worth is what’s meant by capital. Someone with all debt and no assets isn’t usually a good prospect for lenders. You’ve probably heard that they typically lend money to people who don’t need it. That makes sense from a lending standpoint. If someone has shown they can build up assets with debt, you’d be happy to give them more.
Collateral
Collateral secures the debt. Some loans like mortgages are backed by the promise to return property if the loan is defaulted on. If there’s something to get back, there’s less risk to the lender. The last thing the lender wants is to have to deal with a returned house or car but it’s still less risk if there’s that incentive to stay current.
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.
When you’re looking to repair consumer credit, remember the five Cs: character, capacity, capital, collateral and conditions.
Find out how to do your own credit history repair without an agency. Visit www.creditrepairsecrets.org for free credit advice.
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