Definition
Credit ratings are evaluations by agencies (S&P, Moody's, Fitch) of a borrower's ability to repay debt. Ratings range from AAA (highest quality) to D (default). They affect borrowing costs, as lower-rated issuers must pay higher interest rates. Ratings can be upgraded or downgraded based on financial health.
Example
Microsoft has an AAA rating, the highest possible, meaning it pays lower interest rates than a BB-rated company.
FAQ
What is Credit Rating?
An assessment of a borrower's creditworthiness by rating agencies.
Why is Credit Rating important?
Credit Rating helps investors evaluate fixed income and make more informed decisions.