The Three C's of Credit

Hari Srinivas
Coordinator, Virtual Library on Microcredit

Character:
refers to how a person has handled past debt obligations: From the credit history and personal background, honesty and reliability of the borrower to pay credit debts is determined.

Capacity:
refers to how much debt a borrower can comfortably handle. Income streams are analyzed and any legal obligations looked into, which could interfere in repayment.

Capital:
refers to current available assets of the borrower, such as real estate , savings or investment that could be used to repay debt if income should be unavailable. CAMEL is a tool sometimes used for assessing credit-worthiness of a borrower. CAMEL refers to:
  • C: Capital
  • A: Assets
  • M: Management
  • E: Equity
  • L: Liquidity

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Hari Srinivas - hsrinivas@gdrc.org
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