To figure out how to do consumer credit repair, there are five areas lenders look at. They all start with C: character, capacity, capital, collateral and conditions.
Character
Lenders need to know how well they can trust you. That's what they mean by character. A personal relationship with a lender is great. Otherwise it's usually up to your credit report. Late payments don't show good character for example.
Reports of 30, 60 and 90 day delinquencies don't look good on your credit as you can imagine. Every negative entry counts against your credit score. A report to showing all accounts in good standing is the goal in working toward repairing consumer credit.
Capacity
Capacity is your cash flow. You have to have enough money to handle the debt you're asking for. They look at your income and expenses for each month. Lenders rightfully want to make sure you have enough money to make the payments.
Capital
Capital shows that you know how to manage money long term. It's a look at your net worth. Lenders don't want to give money to people who need it. They want to lend to people who have shown to be able to use it wisely to build up more assets. That's a better lending risk for them.
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
The conditions are market and economic conditions outside your control. With the recent economic recession, lending guidelines have become more strict.
This can also apply to your local bank. If a banker is having a bad day, that's a potential condition that could affect whether you're approved or not.
When you're looking to repair consumer credit, remember the five Cs: character, capacity, capital, collateral and conditions. - 29866
Character
Lenders need to know how well they can trust you. That's what they mean by character. A personal relationship with a lender is great. Otherwise it's usually up to your credit report. Late payments don't show good character for example.
Reports of 30, 60 and 90 day delinquencies don't look good on your credit as you can imagine. Every negative entry counts against your credit score. A report to showing all accounts in good standing is the goal in working toward repairing consumer credit.
Capacity
Capacity is your cash flow. You have to have enough money to handle the debt you're asking for. They look at your income and expenses for each month. Lenders rightfully want to make sure you have enough money to make the payments.
Capital
Capital shows that you know how to manage money long term. It's a look at your net worth. Lenders don't want to give money to people who need it. They want to lend to people who have shown to be able to use it wisely to build up more assets. That's a better lending risk for them.
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
The conditions are market and economic conditions outside your control. With the recent economic recession, lending guidelines have become more strict.
This can also apply to your local bank. If a banker is having a bad day, that's a potential condition that could affect whether you're approved or not.
When you're looking to repair consumer credit, remember the five Cs: character, capacity, capital, collateral and conditions. - 29866
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