For those of you who like to apply for credit, this time you must know about the principles of 5C credit analysis. What is the 5C principle?
The 5C Principles of Credit
Do you already know about the 5C Principle of Credit Analysis? This is the 5C series list in credit, including the following:
- Characteristic
One of the 5C Principle of Credit Analysis is the characteristic. What will be checked about characteristics?
The characteristic that exists in the principle of providing 5C credit is the track record of personal credit, be it family or business. Not to forget, another characteristic is the standard of living. You must be able to adjust credit loans to your standard of living. Likewise with your ability to do financial management.
- Capacity
Next is capacity. What capacities will be of concern? Company capacity, financial capacity, and payment capacity. Surely you don’t want your credit application to be rejected after a long time waiting.
From the company’s capacity, it must be ensured that the business can remain strong and survive with this debt burden. Also pay attention to cash flow, when cash flow alone makes it difficult for you to pay salaries and operations, then what if you are made to pay debt as well?
Don’t forget the payment history, which refers to the company’s ability to pay other monthly debts. It also deals with paying interest on credit.
- Condition
Another factor is condition. This condition is an aspect that is no less important in the analysis of creditworthiness. The due diligence used for this credit focuses on risk management. What needs to be considered is analyzing business conditions, industrial conditions, and economic conditions.
If the industry or economy is in good condition but business conditions are bad or vice versa, it will be difficult for credit to be liquidated.
- Capital
The greater the proportion of capital, it can be one of the guidelines for comparison with bank capital. At first, personal investment (70% personal capital and 30% credit application) will certainly be easier for credit applications to be approved. Why is this so? Because the bank considers that the contribution of personal assets is a symbol of good faith and optimism from entrepreneurs in their business. The higher the percentage of risk borne by the entrepreneur, the smaller the proportion of risk that must be borne by the bank.
- Collateral
In the collateral that must be considered is the asset guarantee. In contrast to popular belief, asset collateral is the last thing a bank looks at before making a loan.
Collateral becomes important because we all do not live in an ideal world (das sollen). In practice, there will be many bad debts that force banks to execute collateral. That is why the guarantee is one of the factors, where the role is limited to SAFEGUARD only, when things happen outside the ideal conditions (das sein).
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