Credit Rating
It’s not just you and me who are checked out for our creditworthiness, but companies and countries are too. This is because they borrow money (in the form of bonds and loans) on such a large scale, that the lenders like to have some idea as to how likely, if at all, the borrower is to default. So three main credit rating agencies (Standard & Poor’s, Moody’s and Fitch IBCA) check out their creditworthiness. These agencies have teams of number crunchers continually analysing and sweating over company accounts and the like. In doing so they’re assessing how risky it is for you and me to lend our hard-earned cash to various borrowers. They have devised scoring points to assess the riskiness of lending. The highest rating is usually triple A (AAA) to indicate minimal credit risk, and the scale goes steadily down as the risk of lending increases.
