Which of the following is NOT one of the five Cs of credit?

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

Answer: (A)

The idea being tested is recognizing which factor does not belong in the traditional set lenders use to assess credit risk. The five Cs are Character, Capacity, Capital, Collateral, and Conditions. Character looks at the borrower’s trustworthiness and history of repaying debts. Capacity evaluates whether the borrower has the income and cash flow to make loan payments. Capital refers to the borrower’s net worth and what they have at stake. Collateral covers assets pledged to secure the loan. Conditions consider the loan’s purpose and the external economic environment that could affect repayment.

Currency isn’t part of this framework. It’s simply the medium of exchange or money used in the transaction, not a measure of the borrower’s willingness or ability to repay, nor of the loan’s security, terms, or external conditions. So currency, while important in broader financial considerations, does not belong to the five Cs.