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Creditworthiness

Definition - What does Creditworthiness mean?

Creditworthiness refers to a party's credibility when it comes to the repayment of debt. Creditworthiness is commonly assessed using tools such as credit scores. In the context of the law, many lenders will not give legally binding loans to people unless they have a certain level of creditworthiness. The higher the credit score, the better the creditworthiness.

Also, there are a number of institutions that assess borrowers' creditworthiness and sell this information to lenders.

Justipedia explains Creditworthiness

The reason why creditworthiness is used to evaluate candidates for a loan is because people who have lower credit scores represent a higher risk to the bank. When the bank or another lender gives out a loan, it wants to make sure that it will get its money back, plus interest. If it lends money to people without a high level of creditworthiness, there is less of a chance that the loan will be successfully repaid.

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