creditworthiness
KRED-it-wur-thee-nis
/ˈkrɛdɪtˌwɜːrðɪnɪs/
An assessment of the likelihood that a borrower will default on their debt obligations, based on their financial history.
A holistic measure of a consumer's reliability as a borrower, determined by credit scores, income, and debt-to-income ratio.
The story behind the word. A compound of 'credit' (from Latin 'credere', to trust) and 'worthiness' (from Old English 'weorð', meaning value or honor). It literally means 'worthy of being trusted with money'.
Word relationships
- solvency: Solvency is the ability to pay one's debts, whereas creditworthiness is the perceived likelihood of doing so based on past behavior.
- unreliability: Unreliability is a general lack of dependability, whereas creditworthiness is specifically financial.
Commonly confused with
- credit score: A credit score is a numerical value, whereas creditworthiness is the overall qualitative assessment of risk that includes the score and other factors.
Word family
- creditworthy (adjective): Considered suitable to receive credit.
Collocations
- assess creditworthiness
- determine creditworthiness
- evaluate creditworthiness
Example sentences
- "Lenders evaluate your creditworthiness before approving a mortgage to ensure you can afford the payments." Mortgage underwriting guidelines
Memory hook
Break it down: Credit + Worthiness. Are you worthy of receiving credit? Lenders use your history to find out. How worthy you are of a lender's trust.
When not to use
Do not use to describe general moral character; it is strictly a financial measure of repayment reliability.
Fun facts
- Before credit bureaus existed, local merchants assessed creditworthiness by interviewing neighbors and checking subjective character references.
Explore more words
debtor, credit, default, credibility, indebtedness, creditor
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