Credit Rating

What is it? For individuals, credit risk is based on your financial resources and credit history. Your total debt level, timeliness in paying bills, number of credit cards, and many other factors are taken into consideration. Credit bureaus use credit scoring to quantify to potential creditors how likely you are to pay back a loan.For bonds, a credit rating is an indicator of the risk of default. Bond rating companies have grading systems so investors can quickly determine whether a bond is worth the risk. If a company or municipality has financial problems, their bond credit rating falls and so does the price. You will be OK, however, as long as you hold your bonds to maturity and there is no default

Added By: Nicholas

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We hope you now understand the meaning of Credit Rating. If you need any more information on this term, please don't hesitate to contact us.