What type of assessment focuses on past behaviors to predict future credit risks?

The correct choice is based on the understanding that credit history encompasses the record of an individual's past behavior regarding credit usage, which is crucial in assessing future credit risks. A credit history includes information about past loans, debts, payment patterns, and delinquencies, which financial institutions analyze to gauge the likelihood of a borrower defaulting on a new loan.

Credit history offers a comprehensive overview of how an individual has managed previous financial obligations. By examining patterns such as payment timeliness, outstanding amounts, and overall credit utilization, lenders can make informed decisions about extending new credit or setting interest rates. This predictive capability is essential in lending practices since it helps in determining the creditworthiness of potential borrowers.

In contrast, a credit report is a document that details various aspects of an individual's credit history, including personal information, credit accounts, and inquiries. A credit rating assesses the creditworthiness of a borrower, often expressed as a score, which can incorporate information from the credit history. A financial audit, meanwhile, evaluates an organization’s financial statements and compliance with accounting standards, rather than focusing specifically on credit behavior.