ELI5: Explain Like I'm 5

Credit risk

Credit risk is something that happens when someone is not able to pay back the money they have borrowed. This can happen if someone gets a loan, like a mortgage or a car loan, and then they don't have enough money to pay it back. Credit risk is a problem because it means that the person who loaned the money tries to get their money back from the person that borrowed it and that can be really hard.