By TheStreet Staff What Is Credit Risk? Why Is It Important?When an investor purchases abond, they are essentially making a loan to a corporation or government entity; in return for their investment, the bond issuer promises to repay the loan (principal) with interest over a period of time. But how can an investor be sure that they will recoup their investment in the first place? Credit risk, also known as default risk, is a way to measure the potential for losses that stem from a lender’s ability to repay their loans. Credit risk is used to help investors understand how hazardous an investmen…