ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Creditworthiness, simply put, is how “worthy” or deserving one is of credit. If a lender is confident that the borrower will honor her debt obligation in a timely fashion, the borrower is deemed creditworthy. Financial institutions use credit ratings to quantify and decide whether an applicant is eligible for credit.

Detailed explanation-2: -Ensuring that you make timely repayments against your loan will increase your score, whereas defaulting payments and delaying them would adversely affect your score. Any score above 750 is considered to be a good credit score and this allows you to secure loans at lower interest rates.

Detailed explanation-3: -A creditworthy person or organization is one who can safely be lent money or allowed to have goods on credit, for example, because in the past they have always paid back what they owe.

Detailed explanation-4: -Lenders may use credit scores to evaluate loan qualification, credit limit and interest rate. For a score with a range between 300 and 850, a credit score of 700 or above is generally considered good. A score of 800 or above on the same range is considered to be excellent.