Aahca Essay

Using what you have learned about credits scores and the Five C’s, respond to the following in 50-to 100-words each: 1. Your household cash flow helps to determine which C? Describe this C. Your household cash flow helps determine capacity. Lenders evaluate your ability to afford your current lifestyle and repay your debits based on your household cash flow. Some debt types are your mortgages, student loans, and credit cards. So capacity is money that you spend relative to the money that you earn.

2. When are the five C’s important? The five C’s are important if you are about to apply for a loan.

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Whether you go to a small or large business for a loan, your creditworthiness will be reviewed by the lender. The five C’s are important because lenders will use these five important factors to determine if you should be approved for the loan. 3. Why is a credit score important? It’s important because any lender will want to know your credit score.

Using a credit scoring system like FICO to calculate the likelihood of you repaying. Your credit score is also important because even some employers check your credit score before you are hired.

Looking at your credit score can show employers whether you have a pattern of poor decision-making that might affect your job. What are the top 2 factors in your FICO score? What actions can you take to earn the most points in these categories? The top two factors in your FICCO score is one your payment history. The second factor is the debt or amounts owed. You can earn points in your payment history by getting current and staying current with any missed payments to your credit cards, loans, and or mortgage. If you start managing your credit better and pay on time, then your score will increase over time.

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