Credit Quality

Credit quality refers to the assessment of how reliably a borrower can repay borrowed money or meet financial obligations. It is typically evaluated based on factors like income, debt levels, credit history, and financial stability. High credit quality indicates a low risk of default, meaning the borrower is likely to repay on time. Conversely, low credit quality suggests higher risk, which can lead to higher interest rates or difficulty obtaining credit. Credit quality helps lenders decide whether to approve loans and at what terms, ensuring financial decisions are made with an understanding of potential risks.