Definitions for "Credit Risk"
The risk that a counter-party to a transaction will fail to perform according to the terms and conditions of the contract, thus causing the holder of the claim to suffer a loss.
As well as the risk deriving from movements in general interest rates, bonds - being debt instruments - usually carry an element of credit (or default) risk. The common exception is domestic government debt, because the state has no need to default in its own currency. In extremis it can simply print more money to repay the debt.
The possibility that a bond issuer will fail to repay interest and principal in a timely manner. Also called default risk.
The likelihood of a consumer to pay back an outstanding debt.
An assessment of a consumer's likelihood of fulfilling the terms of a credit agreement.
The financial inability to pay under the contracts.