Credit risk is the obligation of an individual or a legal entity that is linked to a credit transaction, either directly - as sole owner or jointly with other people - or contingent, as guarantor for third parties.
A common example of contingent loans are agreed lines of credit. If a person applies for a credit card, the institution that grants the card assigns a credit limit for spending, that the person may use fully or not. This limit is an agreed line of credit and represents a contingent loan.
What is credit rating?
Credit rating is the appraisal of compliance and payment capacity of debtors by financial intermediaries, credit management companies and financial services companies. Based on this assessment they assign a risk category according to the rules issued by the Superintendency of Financial Services. The risk category assigned generally refers to the debtor, although sometimes the rating may correspond to a specific operation and not to the debtor.