Consumer Credit Repair: 5 C’s Of Good Credit

To figure out how to do consumer credit repair, there are five areas lenders look at. They all start with C: character, capacity, capital, collateral and conditions.

Character

Character refers to how well lenders can trust you. If they know you personally, that's great. Oftentimes, this is determined by how well you've made payments on time.

Credit cards especially report 30, 60 and 90 day delinquencies to the credit reporting agencies. Each negative entry counts against your credit score. If it's not already there, you'll want your report to show all accounts in good standing to repair your consumer credit.

Capacity

Capacity means you have enough cash flow to handle the debt you're seeking. They look at how much money you have coming in each month as well as how many expenses you have. Lenders want to make sure you have enough money at the end of the month to make your payments.

Capital

Capital is your net worth. Even if you're making plenty of money each month, if you have way more debt than you have assets, you're a bigger lending risk.

Collateral

Collateral is something to secure the debt. Typically, loans are secured by property such as real estate or vehicles. If there's something to get back should you default on the loan, there's less risk to the lender.

Conditions

Conditions are actually market and economic conditions. With the fall, consolidation, bail out, etc of many large financial institutions, lending guidelines have become tighter.

This can also apply to your local bank. If a banker is having a bad day, that's a potential condition that could affect whether you're approved or not.

When you're looking to repair consumer credit, remember the five Cs: character, capacity, capital, collateral and conditions.