Consumer Credit Repair: What They're Looking For

Let's say you want to do consumer credit repair. Lenders will be looking at five areas. Those factors all start with C: character, capacity, capital, collateral and conditions.

Character

Your financial trustworthiness is character. It's great if a lender knows you or your family personally. This is more often determined by your credit score. Whether you've made payments on time can play a big part here.

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 is the ability to make the payments. It's essentially your cash flow. If your expenses are close to your total income, they won't want to lend you more money because you won't be able to pay it back.

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. Having more assets shows you're worthy of more credit.

Collateral

Collateral is what they take back if the loan goes into default. Credit cards are unsecured but a mortgage is secured by real estate. While lenders don't want to have to deal with real estate or vehicles personally, having those as collateral is less risk for them.

Conditions

The state of the the market and economy are the conditions. The rise and fall of interest rates and inflation are in this category. As the Federal Reserve tightens up credit to banks, consumers find it harder to qualify as well.

This also applies down to your local lender. If a banker is having a bad day or maybe you look at him funny, that could affect whether you're approved or not.

To repair consumer credit, focus on the five Cs: character, capacity, capital, collateral and conditions.

Find out how to do your own credit repair without an agency. Visit www.creditrepairsecrets.org for free credit help.