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What is a credit rating?
Quick answer
A credit rating is an assessment of how likely a borrower — often a government or company — is to repay its debt. Agencies like Moody's and S&P assign grades (such as AAA down to junk); higher ratings mean lower risk and cheaper borrowing.
Key things to understand
- It rates how likely a borrower is to repay debt.
- It applies mainly to companies and governments.
- Agencies grade from top (AAA) down to 'junk'.
- Higher ratings mean lower borrowing costs.
People also ask
What is a credit rating?
An assessment of a borrower's ability to repay debt, expressed as a grade like AAA or BB.
How is a credit rating different from a credit score?
Credit scores apply to individuals; credit ratings usually apply to companies and governments.
Why do credit ratings matter?
They affect how much interest a borrower pays — lower ratings mean higher borrowing costs.
Part of the guide: Money Basics: Save, Borrow & Invest →