Economics- Unit 2- Study Guide

This "C" indicates your ability to repay a loan. Current income and debt will be taken into consideration.

• Collateral

• Capacity

• Capital

This "C" references your financial responsibility. Questions will be related to payment history, employment, and type of credit you've had in past.

• Character

• Capacity

• Capital

Do you own your own home is a question of...

• Character

• Capacity

• Capital (collateral)

How long have you lived in your home?

• Character

• Capacity

• Capital (collateral)

Is your spouse employed?

• Character

• Capacity

• Capital (collateral)

What is your annual household income?

• Character

• Capacity

• Capital (collateral)

Do you have a savings account?

• Character

• Capacity

• Capital (collateral)

Have you ever been refused credit?

• Character

• Capacity

• Capital (collateral)

Have you regularly made payments on time?

• Character

• Capacity

• Capital (collateral)

What does RISK, from the perspective of the lender, mean?

• how likely or unlikely the borrower is to repay the loan

• how new or old the borrower's assets are

• whether or not the lender has enough to lend to the borrower