credit

creditworthiness

A lender's assessment of how likely a borrower is to repay debt based on credit history, income, and other factors.

Example

“Her strong creditworthiness qualified her for the lowest available interest rate.”

Memory Tip

WORTHY of credit — lenders decide if you are trustworthy enough to lend to.

Why It Matters

Creditworthiness directly affects whether you can borrow money and at what interest rate. A strong creditworthiness rating can save you thousands of dollars in interest payments over time, while poor creditworthiness may result in loan denials or much higher borrowing costs.

Common Misconception

Many people believe that creditworthiness is based only on credit score, but lenders also evaluate income stability, employment history, existing debt levels, and down payment amounts. A high credit score alone does not guarantee approval if other factors raise red flags.

In Practice

When Sarah applied for a mortgage, the lender reviewed her 750 credit score, verified her annual income of 85000 dollars, and checked that her debt-to-income ratio was 30 percent. Because all three factors looked healthy, she was approved for a 300000 dollar loan at 6 percent interest instead of the 7.5 percent rate offered to applicants with weaker creditworthiness profiles.

Etymology

From Latin 'credere' meaning to trust plus Old English 'weorthscipe' meaning worthiness.

Common Misspellings

credit-worthinesscreditworthynesscreditworthines

More in credit

Other credit terms you should know

credit ratingAn assessment of the creditworthiness of a borrower — indivi…credit scoreA numerical expression (typically 300–850) of an individual'…credit utilizationThe ratio of current revolving credit balances to total avai…defaultThe failure to meet the legal obligations of a loan agreemen…FICO scoreThe most widely used credit scoring model, developed by Fair…hard inquiryA credit check initiated by a lender when you apply for new …