Credit Risk

Importance: 0.57

Is a company: no

Is a proper noun: no

Synonyms

  • liability
  • unworthy of credit
  • hazard
  • unreliable

Definition of Credit Risk

  1. The risk of loss one assumes under a financial contract that a borrower or a counter-party to a loan or other credit-related contract may default or fail to perform its obligations.

Related Terms and Acronyms

  • Default Definition,
    • When a borrower fails to fulfill the obligations of a loan or lease.
  • Delinquency Definition,
    • Failure to make mortgage payments when mortgage payments are due.
  • Netting Definition,
    • The offsetting with a counter-party of financial obligations or payments one is owed with those one is entitled to receive, thus reducing the costs arising out of payment settlements. Netting is also used as a risk management tool to help counter-parties reduce their exposure to credit risk.
  • Credit Insurance Definition,
    • Insurance that covers borrowers and/or lenders if one is unable to repay debts.
    • A policy that pays off the card debt should the borrower lose his job, die or become disabled. The structure of protection for a revolving credit card debt is calculated each month to cover only the debt that existed at the last billing cycle.
  • Credit Worthiness Definition,
    • How likely an individual or entity is to default on their debt.
  • Credit Definition,
    • Money that a lender gives to a borrower on condition of repayment over a certain period.
  • Guaranty Definition,
    • A promise to assume responsibility for a debt if the borrower defaults.
  • Alienation Clause Definition,
    • A requirement that the borrower pay the mortgage in full upon transfer of the property.
  • Provision for Credit Losses (PCL) Acronym, Canada,
    • The amount deducted from income equal to the amount by which a bank adjusts its loan balances to reflect anticipated losses on them.
    • A margin set by companies to compensate for losses due to unpaid credit.
  • Delinquent Mortgage Definition, Important,
    • A mortgage loan where the borrower fails to make payments as specified in the loan agreement.
  • Credit Rating (CR) Acronym, Very Important,
    • A judgement of a person's ability to repay debts. The rating is often based on a person's current and projected income and past debt payment history. Also called a credit score.
    A metric to measure the credit worthiness of a debtor.
  • Credit History Definition,
    • A record of an individual's or company's past borrowing patterns and whether or not debts were repaid on time.
  • Gross Debt Service (GDS) Acronym, Very Important,
    • The total monthly mortgage (or rent) payments, property taxes, utilities and maintenance fees as a percentage of gross monthly income.
    Used by mortgage lender underwriters to determine one's ability to qualify for a mortgage loan.
  • Loan Definition,
    • Letting another party use something of value temporarily.
Compare. Calculate. Apply today.
Compare Mortgage RatesMortgage CalculatorsApply for a Mortgage