Definition of Credit enhancement:
Use of personal property as a collateral, or of third-party guaranties (such as that of a co-maker or a standby letter of credit) to augment ones qualification as a bidder or a borrower.
Credit enhancement is a strategy for improving the credit risk profile of a business, usually to obtain better terms for repaying debt.
In the financial industry, credit enhancement may be used to reduce the risks to investors of certain structured financial products.
Meaning of Credit enhancement & Credit enhancement Definition