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Character: The client's creditworthiness and reliability based on their history and reputation. Capacity: The client's ability to repay debts, determined by income and cash flow. Capital: The client's financial resources and equity, indicating their financial health. Collateral: Assets that can back the loan or credit, providing security for the lender. Conditions: The external factors affecting the client's business environment, including economic conditions and industry trends.
A client’s reputation in economics is defined by five key components:
These components influence credit decisions by affecting risk assessment, interest rates, loan terms, decision speed, and credit limitations. A strong reputation generally leads to more favorable credit conditions, while a poor reputation can result in higher risks and restrictions.
