Which 'C' focuses on the applicant's credit history and past debt handling?

• A. Capacity
• B. Character
• C. Collateral
• D. Credit

Answer: (D)

The concept being tested is how lenders evaluate a borrower’s history of managing debt as part of creditworthiness. Among the Cs, the one that specifically looks at the borrower's credit history and how they've handled past debt is the credit factor. This focuses on what shows up on credit reports—paid on time, delinquencies, defaults, bankruptcies, and overall credit history—which provides a record of how reliably the borrower has met debt obligations in the past.

Capacity is about the ability to repay based on income and obligations, not the history of past debt handling. Collateral concerns the assets offered to secure the loan. Character refers to trustworthiness and general reliability, which is broader than just how debts were managed. So when the question asks about analyzing past debt handling and credit history, the credit factor is the best fit.