credit rating

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Credit rating

An evaluation of an individual's or company's ability to repay obligations or its likelihood of not defaulting See: Creditworthiness.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Credit Rating

1. See: Bond rating.

2. See: FICO score.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.

credit rating

an assessment of the creditworthiness of a firm or an individual, which indicates the amount of CREDIT they can reasonably be allowed by a supplier.

The creditworthiness of a company can often be assessed on the basis of information derived from the company's past annual report and accounts, and from confidential details provided by the company's bank. Additionally, there are a number of specialized credit rating companies, such as Dunn and Bradstreet in the UK, who provide information about the creditworthiness of companies in return for a fee.

The creditworthiness of individual customers is more difficult to assess and is often based on some hard information such as court bankruptcy proceedings and default information on hire purchase agreements, together with circumstantial information such as the postal areas in which a potential debtor lives (indicating a suburb or inner city estate, for example). Firms specialize in collecting and processing such data and provide credit ratings in return for a fee. Under the terms of the UK CONSUMER CREDIT ACT, an individual has a right to inspect any credit record kept about them by such a firm.

Suppliers use credit ratings as a means of determining the maximum amount of credit to allow a customer as part of their CREDIT CONTROL procedures.

Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson
References in periodicals archive ?
Study tried to aanalyze correlation between sovereign credit rating, country risk, and bond yield of Pakistan from 1995 to 2015.
BEIRUT: Economists predicted a further downgrade of Lebanon's sovereign credit rating in 2016, noting that the GDP growth could reach 0.7 percent this year.
-- 15 November 2013 : S&P raises its long-term foreign currency sovereign credit rating for Egypt to B-/B from CCC+/C, with a 'stable' outlook.
Standard and Poor's (S&P) downgraded France's sovereign credit rating to AA from AA+.
A high GDP per capita annual growth is expected to lead to a high sovereign credit rating.
Fitch Ratings has warned Kuwait that despite boasting strong financials, its sovereign credit rating is under pressure because of increasing unrest in the country.
Another ratings agency, Standard & Poor's, lowered France's unsolicited long-term sovereign credit rating to 'AA+' from 'AAA' in January.
sovereign credit rating because their businesses and assets are highly concentrated in the U.S.," S&P says.
The seven-member UAE federation is unrated, and the absence of a sovereign credit rating has remained an obstacle to widening the investor base following Dubai's debt crisis which rattled global financial markets last year.
Currently, Fitch, Standard & Poor's and Moody's all place debit capacity as the core standard for sovereign credit rating. Guan, however, believes that a nation's ability to create wealth should be the fundamental factor to pay back debts.
The upgrade also follows an improvement in the Republic of Turkey's sovereign credit rating, which acts as a constraining factor on our rating on OYAK, the statement said.
Dubai will seek a sovereign credit rating by mid-2009 and is already in talks with ratings agencies, director-general of the Dubai Department of Finance said in remarks published on Monday.