wealtheducation-what_is_credit

What is Credit Rating?

Credit Rating is a current assessment of the creditworthiness of a borrower, or the creditworthiness of a borrower with respect to a particular debt security or other financial obligation.

Credit ratings can be assigned to issuers or borrowers and/or specific issues. Issuer ratings focus on a borrower's overall capacity to pay its financial obligations. By comparison, issue ratings refer to the creditworthiness of an issuer's capacity to repay specific debt instruments or transactions such as bonds, medium term notes or commercial paper.

Credit ratings enhance access for issuers or borrowers to borrowed funds and also provide investors with reliable global benchmarks to compare credit quality.

The main benefit of a credit rating is the potential for enhanced access to borrowed funds. By providing a respected representation of a borrower's credit standing, a credit rating enhances debt issuance in credit markets, giving borrowers the broadest possible placement of their debt instruments.

In addition to gaining exposure our ratings give an organisation a convenient way to to establish their financial standing any time, not just when issuing debt. This can form a very important component of improving their dealings with lenders, clients and other counterparties and maintaining investor confidence.