How does the creditworthiness of the borrower a... - SS2 Accounting Loan Capital: Interest Question

The creditworthiness of the borrower is one of the factors that determine the interest rate charged on loan capital. Borrowers with a good credit history are considered less risky, and therefore, are likely to receive a lower interest rate. Similarly, borrowers with a poor credit history are considered riskier, and therefore, are likely to receive a higher interest rate.