The Three C's of Credit
Hari Srinivas
Coordinator, Virtual Library on MicrocreditCharacter:
- 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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