DEFINITION of 'Credit Criteria'

The various financial characteristics that lenders analyze when scrutinizing a prospective borrower. Credit criteria include a borrower's assets and liabilities, income and expenses and credit history. Favorable criteria will usually result in approval, with poor criteria typically having the opposite effect.

BREAKING DOWN 'Credit Criteria'

Credit criteria can also include the number of open accounts with other creditors and the borrower's standing with each one. Any single credit criterion can be used to deny credit to the prospective borrower, but the lender must obey all laws of the credit protection act. Race, age and gender are not acceptable criteria for acceptance or rejection of credit.

RELATED TERMS
  1. Credit Limit

    The amount of credit that a financial institution extends to ...
  2. Credit Denial

    The rejection of a credit application by the prospective lender. ...
  3. Bank Credit

    The amount of credit available to a company or individual from ...
  4. Credit Rating

    An assessment of the creditworthiness of a borrower in general ...
  5. Credit Event

    Any sudden and tangible (negative) change in a borrower's credit ...
  6. Good Credit

    A qualification of an individual's credit history that indicates ...
Related Articles
  1. Personal Finance

    The Basics Of Lines Of Credit

    Lines of credit are potentially useful hybrids of credit cards and normal loans. Learn how a line of credit can help (and hurt) your finances, and how to find the best one to suit your needs. ...
  2. Investing

    Understanding Credit Risk

    Credit risk arises whenever a borrower is expecting to use future cash flows to pay a current debt.
  3. Personal Finance

    What Do Credit Score Ranges Mean?

    Take a closer look at what credit scores in each range mean for your financial future.
  4. Investing

    Revolving Credit vs. Line of Credit

    Revolving credit and a line of credit are arrangements made between a lending institution and a business or individual.
  5. Small Business

    How To Increase Your Appeal To Prospective Lenders

    Making a business eligible for loans/credit cards at the best possible rates requires crafting an excellent credit profile through the smart use of credit.
  6. Investing

    Understanding Credit

    Credit has three common meanings in the financial world.
  7. Personal Finance

    The Importance Of Your Credit Rating

    A great starting point for learning what a credit score is, how it is calculated and why it is so important.
  8. Personal Finance

    6 Ways To Build Credit Without A Credit Card

    It's definitely possible – if a bit more complicated – to build a credit history without traditional credit cards. Just follow these steps.
  9. Personal Finance

    What Lenders Look At On Your Credit Report

    What do lenders consider when they look at your credit report? Several things, including your income and payment history.
  10. Investing

    What Lenders Look at on Your Credit Report

    What do lenders consider when they look at your credit report? It’s a simple question with a complicated answer.
RELATED FAQS
  1. Why do high profiting sales mitigate credit risk?

    Learn more about credit risk in loaning to individuals and businesses. Understand how credit risk is determined and the impact ... Read Answer >>
  2. What information do lenders need when I apply for a credit limit increase?

    Increase your credit limit by making sure your current credit is paid on time and by paying the largest amount you can afford ... Read Answer >>
  3. Do all banks use the Five Cs of Credit when evaluating potential borrowers?

    Understand how lenders analyze a new credit application from a borrower, and learn why the five Cs of credit are an important ... Read Answer >>
  4. What's the difference between a credit bureau and a credit rating agency?

    Learn the differences between credit bureaus that report on individuals' creditworthiness and credit rating agencies that ... Read Answer >>
  5. What are some good alternatives to taking out a line of credit?

    Read more about how opening a line of credit might not be the best answer for you and determine available alternatives if ... Read Answer >>
  6. What is the difference between bad credit and no credit?

    The answer to this question will depend on what information (if any) is found on your credit report, such as any bankruptcy ... Read Answer >>
Trading Center