In a nutshell, a credit assessment is the assessment of the creditworthiness of a borrower, whether in general terms or with respect to a particular debt or financial obligation. Anyone can undergo a credit assessment: an individual, corporation, state or provincial authority, and even sovereign government.
The purpose of a credit assessment is to determine the likeliness that the borrower will pay back a loan within the confines of the loan agreement, without defaulting. If you receive a high credit rating it means that there is a high possibility that you will repay the loan in its entirety, without any issues. If your credit rating is poor, it means that you have had trouble repaying your loans in the past, and might follow the same pattern in the future. The credit assessment affects your chances of being approved for a given loan. It also determines the interest rate at which the loan will have to be repaid.