Final answer:
Credit worthiness is determined by factors such as credit score, collateral, and income, which influence interest rates offered by lenders. A higher credit score, adequate collateral, and sufficient income tend to result in more favorable interest rates.
Step-by-step explanation:
Factors such as character, collateral, and capacity to pay significantly influence an individual's credit worthiness and the ability to receive favorable interest rates. Character is typically represented by a person's credit score, which reflects their past borrowing and repayment history. A good credit score usually indicates a strong history of repaying loans on time, while a poor score reflects late payments or defaults.
Collateral involves offering an asset such as property or equipment as security for the loan, providing the lender with a form of protection against default. The presence of collateral can often lead to lower interest rates since it reduces the lender's risk. Finally, capacity to pay is determined by reviewing a borrower's income sources and conducting a thorough credit check to assess their ability to repay the loan effectively. Additional measures like requiring a cosigner can also play a role in lending decisions.