Creditworthiness is a complex legal and financial characteristic of a borrower, presented by financial and non-financial indicators, which allows assessing its ability to fully and timely pay a loan in the future.
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Credit assessment methods
The main methods of assessing creditworthiness:
- Expert evaluation system - credit experts assess the financial condition and personal qualities of a potential borrower by calculating the required indicators and requesting a credit history.
- Scoring system (scoring) is a method of dividing customers into “bad”, “satisfactory” and “good” using factor analysis. The essence of this model is to use several variables that add up to a digital score for each potential borrower.
Credit Rating Rating by Rating Agencies
Credit rating is rated by rating agencies using special exclusive methods.
See also
- Credit scoring
- Credit rating
- Management of risks