A credit assessment typically involves looking at the applicant’s credit score, income level, employment stability, debt status, debt-to-income ratio, and financial history. However, other factors can also be considered - such as the value of any offered collateral and the applicant’s payment history.

The goal of a credit assessment is to identify, manage, and minimize risk and ensure that the lender is making a well-informed decision.

One’s credit score is an important factor when performing a credit assessment as it’s like a snapshot of their creditworthiness. Generally speaking, a higher credit score indicates a lower risk for the financial institution. This can also translate into concrete benefits such as lower interest rates for the borrower.