Which analysis is commonly used to evaluate the creditworthiness of individuals and businesses?

The credit score is a vital tool used to assess the creditworthiness of individuals and businesses. It is a numerical representation of a person's credit history, summarizing their credit behaviors, payment history, credit utilization, length of credit history, and types of credit accounts they hold. Lenders and financial institutions rely heavily on credit scores when making lending decisions, determining the likelihood that a borrower will repay a loan.

A higher credit score indicates lower risk for lenders, which often translates into better loan terms and interest rates for the individual or business seeking credit. Conversely, a lower credit score can signal potential credit risk, making it more challenging to secure loans or resulting in higher interest rates.

While other options like the debt-to-income ratio, risk assessment, and net worth calculation provide useful insights into an individual's or business's financial health, they do not specifically encapsulate the credit history and repayment likelihood as comprehensively as a credit score does. Thus, the credit score stands out as the primary measure for evaluating creditworthiness.