Character, Capital, Capacity, Collateral and Conditions
Character - demonstrated by your honesty, reliability, willingness to pay and your record of financial accountability. (Your credit score is a reflection of your character!)
Capital -measured by your assets--housing equity, automobiles, personal property, savings, emergency fund, investments, and life insurance (can be demonstrated by your net worth statement).
Capacity - your ability to repay debt from your family's income; this is a measure of your earned income, both present and future, and a measure of your current debt payments
Collateral - an asset pledged against the loan if you don't pay the loan back
Conditions - the loan may be conditional upon the economic standing of the nation at the time of the loan request - it is difficult to get a loan during a recession
includes alimony received, child support received, business income, distributions from taxable individual retirement accounts (such as Traditional IRA's and Traditional 401(k)'s), tax refunds from the previous year (but only if the excess was deducted in the previous year), royalties, farm income, unemployment compensations, taxable Social Security benefits, and any other income not specifically excluded by the IRS.
NOT INCLUDED: scholarships NOT in excess of college expenses, interest on municipal bonds, earnings on qualified retirement plans (401k, IRA, both traditional and Roth), and life insurance proceeds that were received because of a death