Magazine article The Journal of Lending & Credit Risk Management

The Quotable Five C's

Magazine article The Journal of Lending & Credit Risk Management

The Quotable Five C's

Article excerpt

After lacing his many articles for the Journal with relevant and provocative quotes, Strischek now complements the five C's with quotable statements from individuals inside and outside of banking. These quotes have been selected "for both their educational and entertainment value." So enjoy[ldots]and be educated.

The C's of credit have long served as an analytical training tool. Consideration of character, capacity, capital, conditions, and collateral has been a part of every lender's due diligence, with refinements in definitions being made over the years. [1]

So it's time to give the C's their due, with observations on these factors from within and without the industry. After reading the article, the lender can join in the challenge observed by Dorothy Parker, "I might repeat to myself, slowly and soothingly, a list of quotations beautiful from minds profound; if I can remember any of the damn things."


Character, which can be defined as the complex of mental and ethical traits marking and often individualizing a person, group, or nation, typically ranks first among the five C's in determining creditworthiness. The other C's have their places, but unless the borrower is willing to live up to his promise to repay the debt, the lender is taking a risk at the outset of the credit extension so great that the other C's are unlikely to mitigate. The borrower's willingness to honor obligations reflects the value the borrower puts on reputation, honesty, and integrity. In some cultures, however, character has served as the only "C," and we've seen what can result from that.

Synonyms of Character: decency, dignity, nobility, quality, reputation, worth, honesty, integrity.

Quotations on Character:

Every man has three characters--that which he exhibits, that which he has, and that which he thinks he has.

Alphonse Karr (1808-1890)

The universe seems bankrupt as soon as we begin to discuss the characters of individuals.

Henry David Thoreau (1817-1862)

A man never discloses his own character so closely as when he describes another's.

Jean Paul Richter (1763-1825)

The measure of a man's real character is what he would do if he knew he would never be found out.

Thomas Babington Macaulay (1800-1859)

A rich man has no need of character.

Hebrew proverb

A man's indebtedness is not virtue: his repayment is. Virtue begins when he dedicates himself actively to the job of gratitude.

Ruth Benedict (1887-1948),

The Chrysanthemum and the Sword

The reputation of a man is like his shadow, gigantic when it precedes him, and pygmy in its proportions when it follows.

Talleyrand (1754-1838)

One can survive everything nowadays, except death, and live down anything except a good reputation.

Oscar Wilde (1856-1900),

A Woman of No importance


Capacity usually follows character as the second "C." Capacity is the ability of the borrower to operate the business successfully and generate the cash needed to repay obligations as they come due. Capacity is sufficient power, enough strength, and adequate resources to start, maintain, and expand operations as the firm passes through its life cycle.

Synonyms of Capacity: ampleness, sufficiency, room, extent, potential, ability, capability, adequacy, sufficiency, endowment, strength, endurance, perseverance.

Quotations on Capacity:

Sufficiency 's enough for men of sense.

Euripides (480-406 B.C.)

You never know what is enough unless you know what is more than enough.

William Blake,

The Marriage of Heaven and Hell, (1757-1827)

Do what you can, with what you have, where you are.

Theodore Roosevelt (1858-1919)

Make all you can, save all you can, give all you can. …

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