Accommodation Endorsement


DEFINITION of 'Accommodation Endorsement'

A written agreement from one entity to back the credit liability of another. This insurance is made without consideration, and adds strength to the creditworthiness of the insured entity. This would usually be made by a parent company to a subsidiary, and allows the subsidiary to take on the parent's credit standing. An accommodation endorsement is similar to a government guaranteeing a third party's debt with its full faith and credit.

BREAKING DOWN 'Accommodation Endorsement'

This concept is used in everyday life as well. For example, someone who is young and has no credit established to qualify for a credit card or loan, may be able to qualify if a parent or guardian co-signs. This process is similar to accommodation endorsement.

  1. Credit Rating

    An assessment of the credit worthiness of a borrower in general ...
  2. Accommodation Endorser

    An entity or person who agrees to back the credit obligations ...
  3. Bank Guarantee

    A guarantee from a lending institution ensuring that the liabilities ...
  4. Irrevocable Letter Of Credit - ...

    Correspondence issued by a bank guaranteeing payment for goods ...
  5. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, ...
  6. Impaired Credit

    A deterioration in the creditworthiness of an individual or entity. ...
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