Credit Worthiness

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DEFINITION

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

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?


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