Terms

Credit Rating

Parent term

Credit Rating is a quantified assessment of the credit-worthiness of a borrower in terms of debt and financial obligation. A grade assigned to a bond, bond issuer, insurance company, or other entity, it indicates the huge influence on the price and demand for certain securities, particularly bonds. It is also the measurement of a person or a business entity’s ability to repay a financial obligation based on income and past repayment histories. The lower the credit rating, the riskier the investment and the less the investment worth, thus lower-grade/higher-risk securities pay higher interest rates to attract buyers.