Credit analysis is the process of evaluating the creditworthiness of an individual or organization. This involves assessing their ability to repay borrowed funds by examining financial statements, credit history, and other relevant data. Analysts look for indicators such as income, debt levels, and payment history to determine the risk associated with lending money. The results of credit analysis help lenders, such as banks and financial institutions, make informed decisions about extending credit. By understanding the potential risks, they can set appropriate interest rates and terms, ensuring that they protect their investments while providing necessary funding to borrowers like businesses or individuals.