Definition
Character in finance refers to the borrower's reputation, reliability, and history of repaying debts. Lenders consider character when assessing creditworthiness and determining the terms of loans or credit lines.
Why It Matters
Character is one of the key "Five Cs" of credit evaluation (Character, Capacity, Capital, Collateral, Conditions). A borrower with strong character is seen as trustworthy and more likely to fulfill repayment obligations, reducing risk for lenders.
Example
A bank reviewing a personal loan application examines the applicant’s credit history, past loan repayment records, and financial responsibility. A borrower with a long record of on-time payments demonstrates strong character, often resulting in better loan terms.