I'm curious about the various ways that people quantify credit risk. So far, I can really only think of two methods for measuring credit risk: 1) Credit Ratings / Credit Scores 2) Estimating the likelihood that someone will default on a loan over a specified time period
What else is there?
some common metrics: 1. operating cash flow (stable?) 2. coverage ratio 3. debt / equity 4. debt / assets
debt / ebitda free cash flow / debt any leverage metric
One thing I forgot to mention, was that I was talking about consumer debt (and not corporate debt). Looks like some of the answers above still apply to consumers, so thanks guys. Feel free to keep them coming if you think others are applicable to individual consumers.
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