What is a Credit Rating?

Credit rating is a measurement of credit risks linked with a financial security or financial entity. Banks and lenders use credit ratings to analyze if you have the ability to repay a loan based on your income and past repayment records. It is usually expressed as a credit score and is one of the factors to determine whether to lend money.

For example, most businesses receive credit ratings expressed as letter grades (such as AAA, AA or A) from agencies such as Standard & Poor’s, while individuals receive a rating expressed as a credit score known as the CIBIL score.