The four Cs of creditworthiness are character, capacity, capital, and conditions. These are the elements potential lenders examine when determining whether to extend credit to a business.
See your credit score for free at My LendingTree!
The four Cs of creditworthiness are character, capacity, capital, and conditions. These are the elements potential lenders examine when determining whether to extend credit to a business.
Character: This describes the history of the company, including information on location, number of employees, number of years in business, media coverage, law suits, and stock performance.
Capacity: Capacity refers to the business’ ability to pay its bills. This is assessed by examining cash flow, debt, and availability of existing credit.
Capital: Capital is measured by reviewing financial records to determine if the business has the resources to repay its creditors. Working capital, net worth, and cash flow play heavily into a company’s capital ranking.
Conditions: Conditions are the external factors impacting the business, such as market climate, industry growth, legal factors, and the global economic atmosphere.