Credit Rating Agency

A credit rating agency is a company that evaluates the creditworthiness of borrowers, including individuals, businesses, and governments, by assigning credit ratings. These agencies assess the ability of the borrower to repay debt based on financial health, market conditions, and other factors. The most well-known credit rating agencies are Standard & Poor’s, Moody’s, and Fitch. Investors use these ratings to gauge the risk of lending to or investing in a particular borrower.

Example

Moody’s assigns a credit rating to a government bond, helping investors assess the likelihood that the government will meet its debt obligations.