Credit Risk Analysis Models
What are Credit Risk Analysis Models? Financial institutions used credit risk analysis models to determine the probability of default of a potential borrower. The models provide information on the level of a borrower’s credit risk at any particular time. If the lender fails to detect the credit risk in advance, it exposes them to the...
Balloon Payment
What is a Balloon Payment? A balloon payment, simply put, is a large payment that is due at the end of a loan term. It is different from a fully amortized loan, where a loan is paid back in small but equal payments. Balloon Loan vs. Fully Amortized Loan A balloon loan comprises a...
Default Risk
What is Default Risk? Default risk, also called default probability, is the probability that a borrower fails to make full and timely payments of principal and interest, according to the terms of the debt security involved. Together with loss severity, default risk is one of the two components of credit risk. Assessing Default Risk While...
Bank Credit Analysis
What is Bank Credit Analysis? In bank credit analysis, banks consider and evaluate every loan application based on merits. They check the creditworthiness of every individual or entity to determine the level of risk that they subject themself by lending to an entity or individual. Clients with a high level of risk are less desirable...
Credit Analyst Description
What is a Credit Analyst Description? Individuals seeking to join the credit industry look at a credit analyst description to find out if they are qualified for the job. A credit analyst is a credit professional specialized in financial risk analysis. Credit analysts are employed in commercial banks, credit card companies, and investment banks. The main...
