Credit Basics 101
What You Need To Know About Credit

Credit Rating Agencies

Nowadays a country's financial growth depends on how much its citizens invest and its annual expenses and profits.

Giving credit has always been in fashion, for it brings in good money to the potential lenders.

In the same way it allows consumers to have means to participate largely in the country's financial prosperity in this enormous money game. Discipline is of the utmost importance.

Credit bureaus maintain credit records and likewise credit rating agencies determine the appropriate rates according to which consumers and lenders work out their dealings.

Credit rates provided by credit rating agencies function as guidelines in such cases. The issuers are companies, cities, non-profit organizations, or national governments issuing debt-like securities that can be traded in a secondary market.

It is obvious that credit rates are never the same for everyone. They are set on the basis of risk-based pricing. Risk based pricing is a way of price differentiation based on the different expected costs of different borrowers, as set out in their credit rating.

There are more than a hundred credit rating agencies around the world. The top listed credit rating agencies that assign credit ratings for corporations include the following:

  • A. M. Best (U.S.)
  • Baycorp Advantage (Australia)
  • Dominion Bond Rating Service (Canada)
  • Fitch Ratings (U.S.)
  • Moody's (U.S.)
  • Standard & Poor's (U.S.)
  • Pacific Credit Rating (Peru)
  • Egan-Jones Ratings Company (U.S.)

Credit rating agencies are not spared from criticism for their inability to downgrade countries readily and also supporting unscrupulous company management.



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