{"id":155834,"date":"2022-06-22T06:27:03","date_gmt":"2022-06-22T00:57:03","guid":{"rendered":"https:\/\/cbselibrary.com\/?p=155834"},"modified":"2022-06-23T09:14:38","modified_gmt":"2022-06-23T03:44:38","slug":"advantages-and-disadvantages-of-credit-rating","status":"publish","type":"post","link":"https:\/\/cbselibrary.com\/advantages-and-disadvantages-of-credit-rating\/","title":{"rendered":"Advantages And Disadvantages Of Credit Rating | Types, What is Credit Rating?, 8 Key Pros and Cons of Credit Rating"},"content":{"rendered":"

Advantages And Disadvantages Of Credit Rating:<\/strong> According to The Economic Times, \u201cCredit rating is an analysis of the credit risk associated with a financial instrument or a financial entity.\u201d It is completely based on the credential as well as the financial status of the entity done in terms of lending and borrowing. In America, TransUnion, Experian and Equifax are the three major credit reporting agencies. Credit rating can not be a static number rather it remains dynamic based on new information which is provided by financial institutions. If anyone misses a payment and then tries to apply for new credit at that point, the information gets forwarded to credit reporting agencies. One can have high as well as low credit scores based on their previous payment history. There are different credit rating scales from (AAA-D) to represent the risk and company\u2019s creditworthiness. For example, AAA refers to the lowest or no credit risk. AA denotes a very good credit rating, A refers to low credit risk, BBB refers to average credit risk, B is high credit risk or low credit rating, C denotes very poor credit rating and D is considered as Defaulted. The company\u2019s future potential should be based on current performances, profit-making projects and the ability to pay the debt.<\/p>\n

Students can also find more\u00a0Advantages and Disadvantages<\/strong><\/a>\u00a0articles on events, persons, sports, technology, and many more.<\/p>\n

What is a Credit Rating? What are the advantages and disadvantages of Credit Rating?<\/h2>\n

It looks into the creditworthiness of different entities such as groups, businesses, individuals and government organizations, and also analyses the financial risk of whether or not the borrowers will be able to pay back. A good credit rating indicates good payment history and improves credibility. Agencies compile the detailed report and use it for various factors, for example in banks, investors decide about approving a loan application and other proceedings. There are differences between credit rating and credit score, credit rating determines whether an entity can make payments on time or not with such a report, a person is entitled to bank loans. Whereas in credit scores, a number between 300 and 900 is provided to individuals to rate their creditworthiness.<\/p>\n

Since 1993 April, Credit Analysis and Research Private Limited have been offering credit rating services which include bank loans, debt, and recovery. Some credit rating agencies in India are Indian Rating and Research Private Limited, Credit Analysis and Research Limited, and Credit Rating Information Services of India Limited.<\/p>\n