Although standards may vary from lender to lender, all lenders will consider the four main factors of capacity, capital, collateral, and credit when deciding whether or not to provide a loan.
The four credit criteria aid in the methodical evaluation of credit risk. They provide a framework for the collection, division, and analysis of data. Character, capability, capital, and conditions are the four main categories into which the data is divided.
Capital includes any money, investments, or other possessions you are ready to use as security for a loan. The down payment on a home is one example. Generally speaking, the greater the down payment, the better your interest rate and loan terms will be.
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