Multiple Choice
Which of the following statements about credit card convenience checks is true?
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1. Introduction to Accounting
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Which of the following is NOT one of the five Cs of credit?
A
Capacity
B
Character
C
Cost
D
Collateral
Verified step by step guidance1
Understand the concept of the 'Five Cs of Credit,' which are key factors lenders use to evaluate a borrower's creditworthiness. These include Capacity, Character, Collateral, Capital, and Conditions.
Review each term: Capacity refers to the borrower's ability to repay the loan based on income and existing debts. Character assesses the borrower's trustworthiness and reliability, often through credit history. Collateral is an asset pledged to secure the loan.
Identify the term 'Cost' in the options provided. Note that 'Cost' is not part of the Five Cs of Credit, as it does not pertain to the evaluation criteria used by lenders.
Compare 'Cost' with the other options (Capacity, Character, Collateral) to confirm that it does not align with the established Five Cs framework.
Conclude that 'Cost' is the correct answer to the question, as it is not one of the Five Cs of Credit.
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