Default rates refer to the percentage of borrowers who are unable to make their loan payments as scheduled. When a borrower misses a payment, it is considered in default and this rate measures how many loans have gone into default. Default rates can be used as an indicator of creditworthiness and financial stability for both individuals and institutions. Higher default rates may indicate that borrowers are struggling to make their payments due to various reasons such as job loss or economic downturn, while lower default rates suggest a stronger ability to repay loans on time. Default rates can also impact the cost of credit for future borrowers if lenders increase interest rates or tighten underwriting standards in response to higher default rates.