Three C’s of Credit (Credit reputation, capacity and collateral)

The “Three C’s” of creditworthiness have been defined as character (or credit score/reputation), capacity (an income stream, such as a salary) and collateral (assets, such as a house or a car). As early as 1828, the “Three C’s” were defined as cash, credit and character. In 1871, the “Three C’s” were character, capacity and capital; in 1898, the “Three C’s” were credit, capital and capacity; in 1899, the “Three C’s” were character, credit and capital; in 1923, the “Three C’s” were character, capacity and collateral.
 
The “Three C’s” became common banking terminology by at least 1900 that is still used today (often as “Four C’s” or “Five C’s”).
   
     
Investopedia
What Does Five Cs Of Credit Mean?
A method used by lenders to determine the credit worthiness of potential borrowers. The system weighs five characteristics of the borrower, attempting to gauge the chance of default.
 
The five Cs of credit are:
 
-Character
-Capacity
-Capital
-Collateral
-Conditions
 
Freddie Mac
The 3 Cs of Underwriting Factors Used in Loan Prospector’s Assessment
Credit reputation, capacity and collateral are often called the “three Cs” of underwriting. If one of these components is not acceptable or if there is excessive layering of risk across components, the mortgage may not be acceptable for sale to Freddie Mac.
             
Google Books
May 1828, Blackwood’s Magazine, pg. 800:
SHEPHERD.
I’m deceived sairly — neither cash, credit, nor character — which, if you please , - air, let us drink in a bumper-toast.
NORTH.
The Three C’s.— Cash, Credit, and Character ! Hurra — hurra — hurra !
 
Google Books
The Mercantile Agency Annual for 1871
New York, NY: Dun, Barlow & Co.
1871
Pg. 126:
The Three C’s.
Character, Capacity and Capital are the elements of success in all mercantile pursuits.
 
31 October 1898, New Haven (CT) Register, “Plain Talk to Young Men,” pg. 7:
W. H. Williams, the Drummer Evangelist, spoke at the jail yesterday morning. Many of the inmates requested prayers.
(...)
“There are three things every young man needs to succeed, and he cannpot make a success of his life without them. I call them the three C’s—Credit, Capital and Capacity. Credit is the confidence of men who are in a position to help you. With bad company you have not this confidence, therefore no credit.
 
“Capital comes from what you save. Bad company helps you blow in your money. Why is it that as 1898 is drawing to a close, you have nothing as a working capital? You have trained with the wrong crowd. Capability to manage large affairs requires self-control.”
   
Google Books
July 1899, Scribner’s Magazine, pg. 156 (?):
Secretary of the Treasury, who emphasizes the importance of the three C’s— “Character, Credit, Capital.”
 
Google Books
9 September 1899, The Weekly Underwriter, pg. 163, col. 2:
Dr. John Hall had three C’s—“Creed, Conscience and Character”—as the standards of his judgment, and with insurance companies of the future these three C’s’ qualities must be characteristic.
 
Google Books
Advertising, Selling and Credits
Part III: Credit and the Credit Man
By Lee Galloway
New York, NY: Alexander Hamilton Institute
1911
Pg. 532:       
Three essentials in credit giving. — As education has its three R’s, so the business of credit giving has its three C’s — “character,” “capacity,” and “capital,” and the greatest of these is character.
 
Google Books
15 January 1912, Bulletin of the National Association of Credit Men, pg. 50:
LECTURE 6.—The Bases for the Legitimate Extension of Credit. The three “C’s,” Character, Capacity, Capital.
(Lecture by C. W. Hughes of the Hoyt Metal Company—ed.)
     
Chronicling America
1 September 1914, North Platte (NE) Semi-Weekly Tribune, pg. 5, col. 5 ad:
The Three C’s
Character, Cash and Credit
(McDonald State Bank—ed.)
 
Google Books
August 1916, Trust Companies, pg. 118:
The trite method of describing the essentials of a credit risk is by quoting the three C’s — Character, Capacity, Capital, but we must remember the corresponding three C’s, which spell iniquity and disaster, namely: Concupiscence, Conceit, and Cupidity.
 
26 April 1920, Robesonian (Lumberton, NC), pg. 5, col. 5:
C. C. C.
Character, Capacity, Capital.
WHEN a man goes into business and asks for credit his THREE C’s are investigated—CHARACTER, CAPACITY and CAPITAL. The result of this investigation usually determines his general credit standing.
(The National Bank of Lumberton—ed.)
 
25 June 1923, Riverside (CA) Daily Press, “County Bankers Feature Session,” pg. 6, col. 3:
Mr. Smith gave emphasis to the “three C’s,” behind credit, naming them in order of importance as character, capacity and collateral.
   
18 June 1925, Oregonian (Portland, OR), “The Basis of Student Credit,” pg. 10, col. 1:
One is that “total losses” since establishment of the fund in 1911 “have amounted to less than one-half of 1 per cent”; the other that it has been “proved that of the three ‘C’s,’ character, capacity and collateral, given as the basis of credit by James H. Puellicher, president of the American Bankers’ association, the firsttwo embody the best elements of security.” Character, which it is a prime duty of education to stimulate, comes first.
 
20 January 1929, Rockford (IL) Morning Star, “Dealers Save Much Loss by Credit Bureau,” pg. 3, col. 1:
Characters, capacity and collateral are the three “C’s” of the credit highway according to the bureau.
 
Google Books
Glossary of Terms for Agricultural Insurance and Rural Finance
Rome: Food & Agriculture Organization agricultural services bulletin, 100
1992
Pg. 150:
Three C’s of credit
Character, capacity and collateral as used in loan analysis.
 
Google Books
July 1993, Black Enterprise, pg. 58, col. 2:
Even if lenders follow the three “c’s” of credit — capacity (to repay), collateral and character — when evaluating applicants, the record shows African- Americans are often judged by a fourth “c” as well — the color of their skin.

CreditCards.com
Published: October 24, 2008
Learn the three Cs of credit
Credit score, capacity to pay and collateral all are key
By Sally Herigstad
(...)
The three Cs of credit are:
 
1.Credit score (or Character, as demonstrated and measured by your credit score).
2.Capacity to pay (your income and other resources minus other debt payments).
3.Collateral (the car, house, tractor, or other asset attached to the loan).