How does a lender determine how good a borrower is?

Asked by Teresa Boardman, Saint Paul, MN Thu May 17, 2007

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Rhonda Porter, , Seattle, WA
Thu May 17, 2007
A lender reviews many aspects when considering how strong a borrower is. Such factors include credit history, income, assets, down payment invested into the transaction. I compare it to legs on a chair. A borrower can have one leg shorter than the and the chair still works. Two shorter legs and the chair becomes a little riskier, however you can still use it. You can read more on the link below.
3 votes
California M…, Agent, Oceanside, CA
Fri May 18, 2007
Lenders basically weigh three items in order to make a decision on your loan. These three items are CREDIT, CAPACITY, and COLLATERAL, commonly referred to as THE THREE C’S. When all three C’s are strong, the risk on the loan is low. You will then qualify for the best terms. If any one of the three C’s is weak, you will still be likely to qualify for a mortgage, but the risk to the lender is higher, which means the rate may be higher as well. If all three C’s are weak, it can get difficult to obtain a mortgage. Underwriting is a layering of the risk or a blended analysis of these three factors.
2 votes
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