Cs of Creditworthiness (4 Cs)The four Cs of creditworthiness are character, capacity, capital, and conditions. These are the elements potential lenders examine when determining whether to extend credit to a business.
Character: This describes the history of the company, including information on location, number of employees, number of years in business, media coverage, law suits, and stock performance.
Capacity: Capacity refers to the business' ability to pay its bills. This is assessed by examining cash flow, debt, and availability of existing credit.
Capital: Capital is measured by reviewing financial records to determine if the business has the resources to repay its creditors. Working capital, net worth, and cash flow play heavily into a company's capital ranking.
Conditions: Conditions are the external factors impacting the business, such as market climate, industry growth, legal factors, and the global economic atmosphere.