ELI5: Explain Like I'm 5

Consumer credit risk

Hey kiddo! So, you know how sometimes grown-ups use something called a credit card to buy things instead of using money they actually have in their pockets? Well, consumer credit risk is kind of like how much of a risk it is for the company that gave the grown-up the credit card money.

Let me try to explain it this way: when you play with your toys, sometimes they can get broken, right? So, your mom or dad might only let you play with really sturdy toys so they don't break easily. And if you want to play with a more delicate toy, they might say "No" because it's more of a risk that it will get broken.

In the same way, when a company gives a grown-up a credit card, they want to make sure that the grown-up will pay back the money they borrowed. They want to be sure that the grown-up doesn't have a history of not paying back money they owe. They might also check to see if the grown-up has a good job or regular income coming in, so that they can be more sure they will get their money back.

So, basically, consumer credit risk is a way for a company to decide how much of a risk it is to give someone a credit card or loan. They want to make sure they will get their money back, and they use different factors to determine if they think someone is a good risk or not.
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