Credit Worthiness

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DEFINITION of 'Credit Worthiness'

An assessment of the likelihood that a borrower will default on their debt obligations. It is based upon factors, such as their history of repayment and their credit score. Lending institutions also consider the availability of assets and extent of liabilities to determine the probability of default.

INVESTOPEDIA EXPLAINS 'Credit Worthiness'

Several firms have developed rating systems to determine an individual or company's credit worthiness. It is important for each person to keep track of their credit score because this is the main metric used by institutions when determining if the individual is worthy of a favorable rate.

To learn more about credit worthiness, check out What's a better way to borrow money: overdraft or credit cards?

RELATED TERMS
  1. Credit Rating

    An assessment of the credit worthiness of a borrower in general ...
  2. Credit Application

    A request for an extension of credit, either orally or in written ...
  3. Credit Crisis

    A crisis that occurs when several financial institutions issue ...
  4. Retail Credit Facility

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  5. Credit Risk

    The risk of loss of principal or loss of a financial reward stemming ...
  6. Default

    1. The failure to promptly pay interest or principal when due. ...
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