5 Principles of 5C Credit that Customers Must Fulfill

5 Principles of 5C Credit that Customers Must Fulfill

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One of the financial institutions responsible for safeguarding and managing customer funds is the bank. Referring to Law No. 10 of 1998, a bank is a business entity that holds funds from the public and channels funds to the public. When it comes to savings and loans, customers must adhere to the rules of the 5C credit principles.

So, what are the 5C credit principles? Before delving into the definition, it's important to note that these principles are closely related to customers applying for credit. Banks will rigorously verify multiple times before disbursing funds. One example of verification is checking the credit score.

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To learn more, the article below will discuss the 5C credit principles and effective strategies to ensure that customers' credit applications are not rejected by the bank.

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5C Credit Principles

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There are five 5C credit principles that you need to know:

1. Character
   The first thing the bank will do to check customers applying for credit is to assess the character of the customer. Is the customer trustworthy? Then, it's examined whether the customer has good intentions to pay bills within the specified timeframe or not.  
   Information about bill payments or any arrears has been recorded by Bank Indonesia (BI) and is known as the Credit Information System (SID) or BI Checking process. Information in SID is the credit value related to customer bill payments.
2. Capacity
   The second thing studied by the bank is the customer's capacity to manage individual or business finances. From this factor, the seriousness of the customer in repaying the loan will also be seen. Has the customer ever had any problems or not?
3. Capital
   Next, the bank looks at the condition of assets or wealth owned by the customer, especially for customers with businesses. The bank can evaluate the customer's savings balance and investment assets.
4. To assess the eligibility of customers to receive loans, the bank will check semi-annual or annual reports so that the bank can determine the amount of the loan to be granted.
5. Collateral
   The fourth thing the bank looks at is collateral. This means that if the collateral provided by the customer is of high value, the higher the loan application points. This must be carefully considered by the customer. Because if the customer fails to fulfill the obligation to pay the bill, part or all of the collateral can be seized by the bank.
6. Condition
   The fifth thing is the condition. The bank will assess the customer's loan application depending on the customer's condition. For example: the customer's age, health condition, and economic condition. This is important because when the bank provides a loan, the customer must comply with the rules by paying the bills according to the agreement.

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After understanding the 5C credit principles, you need to understand tricks to ensure that loan applications are immediately approved by the bank.

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5 Things to Ensure Loan Applications Are Not Rejected by the Bank

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1. Fulfill the Applicable Terms and Conditions
   The first thing you need to understand is that you must follow the terms and conditions for loan applications listed by the bank. For example: You must be honest in filling out information from name, place and date of birth, to domicile address. This is necessary for the bank to easily scan information or verify.
2. Fill in Data with Detail
   The bank will see your or the customer's seriousness in applying for a loan when the information obtained is truly valid. If this information is invalid, the customer will have difficulty obtaining loan application approval from the bank.
3. Find a Bank Close to Your Domicile
   The third thing you need to know and do is to find a bank close to your area of residence. This needs to be done so that the bank can easily verify. If it's far from home, it's not impossible for the bank to reject your loan application.
4. Secure Income
   The fourth thing is quite important for the bank because it looks at the customer's ability to pay bills. If expenses are greater than income, it will be difficult for the customer to apply for a loan. Because their track record will fall into the bad level.
5. Good Credit History
   The bank will check the customer's credit score through BI Checking. If the customer's score is between 1-2, the customer is eligible to apply for a loan and approval will be easier to obtain. However, if the score is between 3-5, the customer will have difficulty applying for a loan.

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If the 5C credit is the method used by banks to assess the eligibility of customers in applying for loans, then customers, or you, need to follow these requirements. To ensure that your business continues to run optimally, use Brick to connect with digital financial services. Utilize loan service solutions from Brick to make the verification process easier and faster. ***