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Five C’s of Credit | Scott Dawson
(778) 668-9320 [email protected]

When applying for a mortgage it’s important to understand how lenders determine your ability and willingness to repay your mortgage loan. In simple terms lenders use the Five C’s of credit to evaluate your application in the following ways:

Capacity – The ability of a borrower to repay a loan. Lenders will look at both clients GDS (Gross Debt Service Ratio) and TDS (Total Debt Service Ratios).

Capital – The amount of money the borrower has invested into the property with their downpayment or equity.

Character – The overall feeling regarding a borrower’s credibility to repay a loan; the borrower’s length of employment is a key measurement.

Collateral – Guaranteed support for a loan, generally consisting of funds or real estate, that ensures added security to the lender. Collateral can also take the form of guarantees provided by third parties, i.e. guarantors.

Credit – The lender will look at your credit report and assess the repayment history of the borrower.

If you have any questions about the 5 C’s of Credit or would like more information on how to get pre-approved for a mortgage don’t hesitate to contact me by any of the methods below or leave a comment.

Phone: (778) 668-9320
Email: [email protected]
Twitter: @sdd