Creditworthiness

You apply for credit to buy a car. The auto loan financing company wants to determine the likelihood that you will pay your bills on time, and the probability that you may default.

They will measure your creditworthiness in the process of examining your credit history. This includes pulling your credit report and analyzing past debt payment history.

Credit scores are an important component of determining creditworthiness. This figure is based on payment history and the ability of a borrower to pay their bills on time.

Example:

An individual with a credit score of 750 has a high level of creditworthiness. That person is likely to obtain a higher credit limit at a more attractive interest rate than a person who has a credit score of 575. People with lower creditworthiness are likely to pay higher interest rates and interest payments over time, due to a lender’s concerns about default.