what are the principles of the 5 cs of credit that banks operate on 
the main principle behind the five cs is to gauge the risk of extending credit to a borrower a lender needs to evaluate who they are lending money to why the borrower is asking for money and the likelihood of recovering loan proceeds another principle of the five cs is to determine how credit is priced borrowers with more favorable five cs may get better terms lower rates and lower payments borrowers who are riskier with poorer five cs may face unfavorable terms a lender also relies on the five cs to determine whether they want to conduct business with a borrower if a borrower s five cs are poor then the lender may decline to extend credit the bottom linelenders use certain criteria to evaluate borrowers prior to issuing debt the criteria often fall into several categories which are collectively referred to as the five cs to ensure the best credit terms lenders must consider their credit character capacity to make payments collateral on hand capital available for up front deposits and conditions prevalent in the market 