Credit Rating

A credit rating is an assessment of the creditworthiness of a borrower in general terms or with respect to a particular debt or financial obligation. A credit rating can be assigned to any entity that seeks to borrow money – an individual, corporation, state or provincial authority, or sovereign government. Credit ratings are determined by credit rating agencies, which use their own proprietary rating methodologies to produce credit ratings.

History of Credit Ratings

Credit ratings have been around since the late 19th century, when the first credit rating agency, Poor’s Publishing Company, was founded in 1899. Poor’s was the first to assign ratings to companies, and its ratings were based on the company’s financial strength and creditworthiness. Since then, credit ratings have become an important tool for investors, lenders, and other financial institutions to assess the risk associated with lending money to a particular borrower.

In the 1970s, the credit rating industry began to expand, with the emergence of new rating agencies such as Moody’s and Standard & Poor’s. These agencies began to use more sophisticated methods to assess the creditworthiness of borrowers, and their ratings became widely accepted by the financial industry.

Table of Comparisons

Summary

Credit ratings are an important tool for investors, lenders, and other financial institutions to assess the risk associated with lending money to a particular borrower. Credit ratings are determined by credit rating agencies, which use their own proprietary rating methodologies to produce credit ratings. For more information about credit ratings, you can visit websites such as Moody’s, Standard & Poor’s, and Fitch Ratings.

See Also

• Credit Score
• Debt Rating
• Bond Rating
• Moody’s Rating
• Standard & Poor’s Rating
• Fitch Ratings
• Credit Risk
• Creditworthiness
• Credit History
• Credit Report

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