Finance
What is A credit rating?
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.
See it, don’t just read it.
Watch a 2-minute lesson with voice + animation that explains a credit rating.
Key things to understand
- 1It rates how likely a borrower is to repay debt.
- 2It applies mainly to companies and governments.
- 3Agencies grade from top (AAA) down to 'junk'.
- 4Higher ratings mean lower borrowing costs.
Frequently asked questions
- 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.