Identify qualifications needed to obtain credit.
DefinitionIdentification should include the following factors:
- Character, which refers to a borrower's history of paying obligations.
- Capacity, which refers a borrower's ability to repay and is usually measured by current income and level of outstanding debt.
- Capital, which refers to savings and other assets one can use to repay.
- Collateral, which refers to assets the borrower has that could be taken by the lender if the borrower fails to repay.
Other Related Standards
Economics and Personal Finance Standards of Learning
The student will demonstrate knowledge of credit and loan functions by
- evaluating the various methods of financing a purchase;
- analyzing credit card features and their impact on personal financial planning;
- identifying qualifications needed to obtain credit;
- identifying basic provisions of credit and loan laws;
- comparing terms and conditions of various sources of consumer credit;
- identifying strategies for effective debt management, including sources of assistance;
- explaining the need for a good credit rating;
- comparing the costs and conditions of secured and unsecured loans; and
- comparing the types of voluntary and involuntary bankruptcy and the implications of each.