Creditworthiness

DEFINITION of 'Creditworthiness'

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

BREAKING DOWN 'Creditworthiness'

Several firms have developed rating systems to determine an individual or company's creditworthiness. 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 creditworthiness, check out What's a better way to borrow money: overdraft or credit cards?

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