Identification should include the 5 C’s of credit:
- Character, which refers to a borrower's history of paying obligations.
- Capacity, which refers a borrower's ability to repay and is usually measured by current income and level of outstanding debt.
- Capital, which refers to savings and other assets one can use to repay.
- Collateral, which refers to assets the borrower has that could be taken by the lender if the borrower fails to repay
- Conditions, which refers to the overall health of the economy and specifics of the loan.