Credit Risk Assessment is the process of evaluating the likelihood that a borrower will default on their financial obligations. This assessment helps lenders determine the risk associated with lending money or extending credit. Factors considered include the borrower's credit history, income, and overall financial stability. By analyzing these factors, lenders can make informed decisions about whether to approve a loan and what interest rate to charge. A thorough Credit Risk Assessment helps minimize potential losses and ensures that lending practices are responsible and sustainable for both the lender and the borrower.