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Capacity, Credit, and Collateral The three Cs of underwriting play an essential role in the underwriting process. Regarding Capacity, your debt-to-income ratio is the most important component. Ideally, you would like your DTI ratio to be at or below 40%.
Students classify those characteristics based on the three Cs of credit (capacity, character, and collateral), assess the riskiness of lending to that individual based on these characteristics, and then decide whether or not to approve or deny the loan request.
Capacity, Credit, and Collateral The three Cs of underwriting play an essential role in the underwriting process. Regarding Capacity, your debt-to-income ratio is the most important component. Ideally, you would like your DTI ratio to be at or below 40%. There are home loan programs that allow up to a 50% DTI ratio.
When trying to determine whether you have the means to pay off the loan, the underwriter will review your employment, income, debt and assets. Theyll look at your savings, checking, 401k and IRA accounts, tax returns and other records of income, as well as your debt-to-income ratio.
A number of these factors fall under what the Surety industry calls The Three Cs; Character, Capacity, and Capital. All three of these are important to the underwriting process. The principal needs to exhibit the Character, Capacity, and Capital to qualify for surety credit.
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There are four key focuses to the underwriting process: credit, income, assets, and property. Credit: Underwriters will review your credit history to understand your past borrowing and payment history.

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