TIPS: Denied Credit?

Have you been refused credit? Various types of loans are offered by the lenders. With or without collateral, the form of credit cards, and so forth. Loans are generally approved using the principles of the five C’s, which are:

  • Character

This is the data that contains the debtor’s own personality, such as traits related to personal lifestyle, habits, current conditions, family background, perhaps a hobby that they spend money on. The function of the assessment aims to determine to what extent the debtor wishes to act in accordance with a predetermined agreement. The extension of credit is essentially based on trust, and the underlying belief that is the belief of the creditor, that the debtor has the morals, character, and personal qualities  to fulfil their obligations to make the regular payments. Character is a dominant factor, because although a prospective borrower is able to complete the loan, but if they do not have good intentions, of course in the future will bring difficulties for creditors.

  • Capacity

Capacity in question in this case is the assessment, in terms of the ability of borrowers to repay their obligations from the business or professional activity that was involved and will be financed by loans. So this assessment is to determine how the maximum results of these efforts are able to repay the loan that has been granted, in accordance with the agreed deadlines. Measurements in this case can be done for example by reviewing the terms of their experience, and from the early history of their finances and to see how they managed when subjected to harsh conditions.

  • Capital

Is their property (for example) owned by a managed field or profession that they do. Judgment will be made from transactions, balance sheest, income statements, capital structure, the ratio of profits and so forth. From these, assessements are made on  the feasibility of a prospective borrower, and the level of funding or financing limits the amount that should be given.

  • Condition

Credit will be given to consider the condition, especially in economic terms, related to the prospects of potential borrowers. Because there are some businesses that are highly dependent on economic conditions. Therefore it is necessary to relate the economic condition of borrowers who want to improve their business. The problem about this is closely related to political factors, banking legislation,and banking conditions at the time, and other circumstances that affect the marketing sector, such as local economy, natural disasters, riots, and so on.

  • Collateral

The guarantee can be made that allow assets to be subject to seizure by creditors, if the debtor is unable to meet its obligations. It is calculated at the end, where there are doubts on the part of creditors. Therefore, security is very likely to be considered and be the last step in the credit application decisions.


These are the primary measures of loan applications of borrowers. Credit application is approved or not, all depending on how far you have the 5C’s. With this information, it can be helpful for you to intelligently prepare if you want to acquire credit.