Credit Rating

Credit rating

An evaluation of an individual's or company's ability to repay obligations or its likelihood of not defaulting See: Creditworthiness.

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Credit Rating

1. See: Bond rating.

2. See: FICO score.

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credit rating

A grading of a borrower's ability to meet financial obligations in a timely manner. Credit ratings are set by lenders and by independent agents for companies, individuals, and specific debt issues. See also bond rating.

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Credit rating. Your credit rating is an independent statistical evaluation of your ability to repay debt based on your borrowing and repayment history.

If you always pay your bills on time, you are more likely to have good credit and therefore may receive favorable terms on a loan or credit card, such as relatively low finance charges.

If your credit rating is poor because you have paid bills late or have defaulted on a loan, you may be offered less favorable terms or may be denied credit altogether.

A corporation's credit rating is an assessment of whether it will be able to meet its obligations to bond holders and other investors. Credit rating systems for corporations generally range from AAA or Aaa at the high end to D (for default) at the low end.

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Credit Rating

What Does Credit Rating Mean?

An assessment of the creditworthiness of individuals and corporations. It is based on the history of borrowing and repayment as well as the availability of assets and the extent of liabilities.

Investopedia explains Credit Rating

Credit is important because individuals and corporations with poor credit will have difficulty finding financing and most likely will have to pay more because of the risk of default. Credit ratings are a tool used by lenders to determine the types of loans and rate of interest that can be extended to a potential borrower.

Related Terms:
• Bond
• Bond Rating
• Debt Financing
• Interest Rate
• Risk