credit evaluations

Credit evaluations are assessments that determine an individual's or business's creditworthiness, which is their ability to repay borrowed money. These evaluations consider various factors, including payment history, outstanding debts, credit utilization, and length of credit history. Lenders, such as banks, use credit scores—numerical representations of credit evaluations—to decide whether to approve loans or credit applications and at what interest rates. A higher score typically indicates lower risk, making it easier to obtain credit under favorable terms, while a lower score may result in higher interest rates or denied applications.