Cookie- und Privatsphäre-Einstellungen

Diese Webseite nutzt Cookies, um essenzielle Funktionen wie den User-Login und Sessions zur Verfügung zu stellen. Wir nutzen zudem Cookies und Software von Dritten, um Dein Surf-Erlebnis auf zu verbessern. Du kannst entweder nur essenzielle Cookies oder alle Cookies akzeptieren. Du kannst Deine Einstellungen jederzeit in unseren Cookie- und Privatsphäre-Einstellungen ändern. Dieser Link ist im Footer unserer Seit zu finden. Wenn Du mehr Informationen benötigst, besuche bitte unsere Datenschutz-Erklärung.

Datenverarbeitung in den USA: Indem Du auf "Ich akzeptiere" klickst, willigst Du zugleich gem. Art. 49 Abs. 1 S. 1 lit. a DSGVO ein, dass Deine Daten in den USA verarbeitet werden (von Google LLC, Facebook Inc., LinkedIn Inc., Stripe, Paypal).

Einstellungen individuell vornehmen Ich akzeptiere
Melde Dich an und erhalte kostenlosen Zugriff auf über 50 Artikel.
Jetzt kostenlos registrieren >>

Gelesene Artikel: 0/52

The 5 Cs of Credit is a method to determine the credit worthiness of borrowers

With 5 characteristics – Character, Capacity, Capital, Collateral, Conditions – the worthiness and the potential risk of credit is approximated

The 5 Cs of credit framework is one that is used to estimate the potential risk of a credit to a certain borrower. The 5 Cs of credit concept does not have to be applied very often in consulting interviews in its pure play form. Even if it is not one of the "must have" skills, it is still worth looking at this concept. Especially if you are from a finance background or if you're applying at a consultancy with a strong financial services focus.

We will now go over these 5 factors in more detail – while you probably won’t need to learn all the factors by heart, knowing just the names of the 5 factors is probably the 80/20 way to go here.


Character is a subjective judgment about the potential borrower. Factors that are taken into account can include:

  • First impression
  • Reputation of the borrower
  • Know-how and experience
  • References and background


Capacity might objectively be the most important factor because it refers to the ability of a potential borrower to pay the loan back.

Factors include:

  • Cash position/expected cash flows
  • Revenue and expenses
  • Credit history


In this context, capital is the amount the potential borrower has invested in the business/company. It is normally an indicator of how much the borrower is involved in the company and how much he/she has to lose if the investment fails. A higher (relative) capital investment of a potential borrower usually means more alignment with the incentives of the lender and the borrower.


Guarantees or other forms of security the potential borrowers can offer are known as collateral. These forms of security can include:

  • Buildings
  • Equipment
  • The owners private properties


Conditions are two-folded and include the overall economic environment and the intended purpose of the loan. As a rule of thumb, the economic circumstances in general are less favorable for a potential borrower if the economy is in a downturn/recession.

Taken together, these five factors usually give a reliable picture of the credit worthiness of a buyer from a qualitative and quantitative point of view.

Key takeaways:

  • Method to determine the credit worthiness of borrowers.
  • 5 factors of interest: character, capacity, capital, collateral, conditions.
  • Occasionally used during case interviews, more specialized framework for financial cases.

Verwandte Übung(en)

The 5 Cs – Test Your Knowledge

The 5 Cs of Credit is a method to determine the credit worthiness of borrowers. Let's see if you have a strong financial focus!

10 Min.
5 Fragen
nicht verfügbar
Mit Premium freischalten