Just call us Bond. Amortized bond.
Over 700 finance terms, Shmooped to perfection.
Will the borrower pay or end up a deadbeat who doesn't pay their debts? That's credit risk: the risk that the promise to pay won't be honored.
Lenders are really worried about credit risk and have all sorts of ways to figure out whether you're a good risk or a bad one. They might take a peek at your credit score, for example, or run an employment verification to get some intel on you.