How do the following affect credit worthiness (collateral‚ capacity‚ credit history) ?

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Social Studies

12 August, 06:57

How do the following affect credit worthiness (collateral‚ capacity‚ credit history) ?

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Drew Stanton · Answer 1

How do the following affect credit worthiness (collateral‚ capacity‚ credit history) ?

Collateral describes the security or insurance that a company would have over someone incase they do not pay their payments on time. A house can serve as collateral for a loan because if the person doesn't make their mortgage payment, the lender can take the home. Capacity describes the maximum amount of debt that a person is expected to be responsible for based on their financial ability to repay. Credit history refers to everything that a person has ever used credit or a loan to make a purchase with and their likelihood of making payments on time.