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# Credit Enhancement

Credit Enhancement is a derived score in Steakhouse Financial's Market Rating layer that combines the Price Fluctuation and LLTV assessments. It acts as a safeguard for on-chain lending and investing activities against the credit risk of the underlying asset.

Together, the [Price Fluctuation](/docs/risk-management/collateral/layers-pillars-and-criteria/market-rating-layer-3/price-fluctuation) rating, adjusted by the bonus of the [LLTV](/docs/risk-management/collateral/layers-pillars-and-criteria/market-rating-layer-3/lltv) rating, forms the Credit Enhancement rating. This Credit Enhancement acts as a safeguard for on-chain lending and investing activities against the credit risk of the underlying asset.

If there is a high probability of losses on the underlying asset, but the on-chain mechanisms ensure that these losses are absorbed, the risk is mitigated.

Conversely, in the case of a crypto asset with no underlying credit risk, the probability of losses will come from an aggressive configuration of the market parameters, such as allowing a high LLTV for a highly volatile asset.