The Four Cs of Extending Credit

As credit is considered to be one of our most important assets, as a creditor you

should be careful in deciding to whom you are going to grant that privilege. When

extending credit you want your customer to possess:

Collateral – Customers must be able to “back up” their loan with some type of asset

that they can use as leverage.

Character – Customers should be able to provide you with financial or personal

references that you are able to contact. Personal credit reports, background checks and

written referral letters are all items to consider.

Career – Essentially, you would like your customer to be employed or be aware of their

source of income. If they are unemployed, how are they going to re-pay their debt to

you? Pay stubs, a letter from their employer and proof of length of employment are

important when making your decision to grant them credit.

Competence – People who display a general understanding of borrowing money and

the consequences if re-payment terms are not met are going to be better candidates for

extending credit services.