Credit risk pdf

Credit Risk is the probability of a borrower defaulting on debt obligations.
Lenders risk not receiving the principal and interest component of the debt.
This can result in an interrupted cash flow and increased cost of collection.

Credit risk is when a lender lends money to a borrower but may not be paid back.
Loans are extended to borrowers based on the business or the individual’s ability to service future payment obligations (of principal and interest).

Credit risk analysis is a type of scrutiny performed to acknowledge the borrower’s ability to pay back.
Credit risks infer the ability of the individual to pay back what he owes; lenders usually perform various assessments to mitigate any loss that would arrive in the foreseeable future.