Credit analysis is the process of evaluating the creditworthiness of an individual or organization. This involves examining financial statements, credit history, and other relevant data to determine the likelihood of repayment. Lenders, such as banks or credit unions, use credit analysis to decide whether to extend loans or credit to borrowers, ensuring they can manage the associated risks. The analysis often includes assessing factors like income, debt levels, and payment history. Tools like credit scores, which summarize a borrower's credit behavior, play a crucial role in this evaluation. By conducting thorough credit analysis, lenders can make informed decisions and minimize potential losses.