Credit Risk Assessment

Credit risk assessment is the process of evaluating a borrower's ability to repay a loan. Lenders, like banks, collect information about an individual's or company's financial history, income, credit score, and existing debts. This analysis helps them determine the likelihood that the borrower will default on the loan. A thorough credit risk assessment helps lenders make informed decisions about whether to approve a loan, how much to lend, and what interest rates to charge, ultimately protecting them from potential losses while allowing borrowers access to necessary funds.