What are the 5 C’s of Lending?

As you navigate your way through building business credit, you may be wondering what criteria a lender will consider when they examine your credit application.

Real talk, this is an excellent question and shows you are serious about presenting your business to lenders in a manner that will ensure you’re approved.

Although each lender has unique scoring models to determine an applicant’s creditworthiness, using the 5 C’s of Lending is important to understand when building any credit profile.

So, let’s break them down to ensure you and your business are prepared to secure the funding you deserve.


The first C could easily be credit history, but in this case, it’s more about what an applicant’s credit profile tells lenders regarding their reputation for repaying debt.

This step of the 5-point method is a look into who you are as a borrower and paints a picture of the likelihood of you paying them back.


While reviewing your credit report, a financial institution will take a deep look into all your financial documents to get a clear picture of your obligations versus your income amount.

This formula is known as the debt-to-income ratio and determines if you can take on new debt without stressing your wallet.


How much money do you have? Can you pay back the debt? This is a common qualifier when borrowing for large purchases like real estate.

For example, having the capital to make a down payment shows lenders you are serious about your investment and makes them feel comfortable loaning to you.


Do you have any assets to secure the loan if you can’t pay? Lenders are more willing to loan money when their risk of loss is low.

By backing the loan with an object of value – for example, a car or house, the lender has something to possess if you default.


The final C ties everything together with a clear objective and purpose for your loan or tradeline. A lender wants to know if there is a market for your business and the likelihood of it being stable.

This also includes conditions for the loan, such as interest rate and amount of credit you’ve requested.

Now that you’ve familiarized yourself with the 5 C’s of Lending, it’s time to set your business up for success!


Understanding the 5 C’s of Lending will prepare you for everything a lender may hit you with during the application process. By presenting your business to lenders in a professional manner, they’ll be more likely to take your business seriously and grant the funds you need.

Ready to know more about setting your business up for success? Join Flyy Credit University and learn how to get the credit you deserve.


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