How is credit exposure calculated, in credit ratings?

Credit exposure is a measurement of the maximum potential loss to a lender if the borrower defaults on payment. It is slightly different from credit limit. The credit bureau only shows what is your spending pattern and how likely you repay his debts and the probability of going default. Example: if i earn $3000, i can have a credit limit of say $10k. It could probably translate that the bank is willing to lend up $10k and is willing to expose to losing that $10k because you choose to default it. But of course, anyone can choose to amend the credit limit lower than what the bank gives, which doesn't translate credit limit to credit exposure in that sense. On a side note, civil servant will not be able to take unsecure loans (credit card) more than 3 of their pay regardless of how much the bank is willing to loan them.

Hi Anon,

Credit exposure is how much credit you're exposed to. If I'm not wrong, this refers to your credit limit across your credit cards and your loans.

Credit limits are usually calculated based on your salary for regular credit cards, and fixed at $500 for student credit cards.

Hope this helps!

Regards,
thefrugalstudent