| |
Capacity
In attempting to determine the creditworthiness of an individual, one of the factors that fall under consideration is "capacity." Essentially this is a measure of the person's ability to both earn a wage (or to bring in income from another source) and to continue to earn a wage (or generate income). This is figured against the debt currently being carried by the individual. While capacity is a factor that may be taken into consideration in deciding whether or not to grant a loan, there is no information in a credit report per se that addresses capacity.
Many factors may be considered in determining capacity. These might include living expenses, current debts, and payments that must be made on other financial obligations. Capacity is taken together with character and collateral in the decision making process. There are no set formulas for how these three areas are assessed and to some degree the loan officer must go on experience in quantifying their shared significance.
More terms explained
|
|
|
|
|
|
 |
 |
 |
| Suggest
an Article |
| Haven't
found the article you are looking for,please suggest your
article. We value all your suggestions and comments. |
|
|
 |
 |
 |
 |
|
|
