What Is 'credit-netting'?
Answers
A credit rating is an evaluation of the credit risk of a prospective debtor (an individual, a business, company or a government), predicting their ability to pay back the debt, and an implicit forecast of the likelihood of the debtor defaulting.[1] The credit rating represents an evaluation of a credit rating agency of the qualitative and quantitative information for the prospective debtor, including information provided by the prospective debtor and other non-public information obtained by the credit rating agency's analysts.
Credit reporting (or credit score) – is a subset of credit rating – it is a numeric evaluation of an individual's credit worthiness, which is done by a credit bureau or consumer credit reporting agency.
Credit netting is the practice of bundling together numerous transactions and performing a single credit check on that combination.
♥ It is used by large financial firms to avoid conducting several redundant credit checks.
♥ Credit netting can help reduce administrative overheads and delays for both parties to a credit transaction.
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Shreya ❤