ECONOMICS
CREDIT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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character, capacity, and capital
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Truth-in-Lending regulations
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voluntary and involuntary bankruptcy
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repossession
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Detailed explanation-1: -The five Cs of credit are important because lenders use these factors to determine whether to approve you for a financial product. Lenders also use these five Cs-character, capacity, capital, collateral, and conditions-to set your loan rates and loan terms.
Detailed explanation-2: -CHARACTER – Your credit history or track record for repaying your debt. CAPITAL – The cash you have to put towards the investment. COLLATERAL – The asset used to secure the loan. CAPACITY – Your ability to repay a loan or debt-to-income ratio.
Detailed explanation-3: -What are the 5 Cs of credit? Lenders score your loan application by these 5 Cs-Capacity, Capital, Collateral, Conditions and Character. Learn what they are so you can improve your eligibility when you present yourself to lenders.
Detailed explanation-4: -Your capacity refers to your ability to repay loans. Lenders can check your capacity by looking at how much debt you have and comparing it to how much income you earn. This is known as your debt-to-income (DTI) ratio.