The Four "C's" - Credit Rules for Getting a Loan After Bankruptcy

When evaluating whether to give a borrower a loan, lenders tend to look to the “Four C’s of Credit” — Credit history, Capacity to repay, Cash to close, and Collateral. These "Four C's of Credit" prove a borrower's creditworthiness, especially after the borrower in question has completed a bankruptcy.

Credit History

Bankruptcy will obviously be a factor in your credit history, but a lender will also look at your overall credit history (before and after the bankruptcy) rather than focusing on a single event. Learn ways to rebuild your credit after bankruptcy.

Capacity to Repay

Capacity to repay a loan mainly involves having enough income to afford the monthly payments in addition to your other bills. Since bankruptcy wipes out a lot of debt you may have otherwise been carrying, you no longer have to make those monthly loan payments. In this way, bankruptcy likely improves your capacity to repay a new loan.

Cash to Close

This one is pretty straightforward. A lender will look at how much cash you have in a savings account or other liquid account that you can use for a down payment toward a loan. After bankruptcy, make an effort to build your savings.


Collateral could be any asset you own to “secure” a new loan, such as a car, equity in your home, a savings account, etc. For instance, you may be able to get a secured credit card by putting up cash toward the credit limit (i.e. 50 percent of the limit). However, collateral can also mean the asset itself for which you are seeking the loan. For example on a car loan, the car itself is the collateral. If you can make a 10 percent to 20 percent down payment on the car, then the lender may be more confident to give you the loan knowing that there would be enough “equity” in the car to pay off the loan if needed.

Remembering the “Four C’s of Credit” is an easy tool to help you focus your financial efforts to qualify for a loan after bankruptcy. Work on each of these four areas and before you know it bankruptcy will just be a thing in your past.

To learn how bankruptcy will affect your particular situation, contact attorney Kerry Denton at Denton Law Group for a free consultation. Call (619) 458-3739 today and be on your way to a new financial start.

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