credit-assessment

Vocabulary Word

Definition

'Credit assessment' is the process that a bank or financial institution uses to decide how much of a credit risk a person is. It's like a report card on how good someone is at paying back money they borrow.

Examples in Different Contexts

In finance, credit assessment is a key step in the lending process, determining if a borrower is a good risk. A financial analyst might state, 'Effective credit assessment helps us identify reliable borrowers and minimize default risk.'

Practice Scenarios

Business

Scenario:

The potential client has a history of late payments. This could be a flag for us moving forward.

Response:

Let's run a credit assessment to determine whether we should proceed with them or not.

Tech

Scenario:

Our AI model needs refining to ensure its making accurate predictions on customer payment behavior.

Response:

Incorporating a broad range of variables in our credit assessment algorithm can improve its accuracy.