credit risk

  

Definition

Probability of loss from a debtor's default. In banking, credit risk is a major factor in determination of interest rate on a loan: longer the term of loan, usually higher the interest rate. Also called credit exposure.

Use credit risk in a sentence

  • The fast food employee really wanted the Lamborghini, but his income to debt ratio posed a serious credit risk to the dealership.

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  • I did not want to do it because it would be a really big credit risk and it could end up hurting me.

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  • You need to know how much of a credit risk someone is when you decide if you should allow them to borrow.

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