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A credit rating assesses the credit worthiness of an individual, corporation, or even a country. Credit ratings are calculated from financial history and current assets and liabilities. Typically, a credit rating tells a lender or investor the probability of the subject being able to pay back a loan. However, in recent years, credit ratings have also been used to adjust insurance premiums, determine employment eligibility, and establish the amount of a utility or leasing deposit.

A poor credit rating indicates a high risk of defaulting on a loan, and thus leads to high interest rates, or the refusal of a loan by the creditor.

Contents 1 Personal credit ratings 2 Corporate credit ratings 3 Sovereign credit ratings 4 Short term rating 5 Credit rating agencies 6 References 7 See also

In countries such as the United States, an individual's credit history is compiled and maintained by companies called credit bureaus. In the United States, credit worthiness is usually determined through a statistical analysis of the available credit data. A common form of this analysis is a 3-digit credit score provided by independent financial service companies such as the FICO credit score. (The term, a registered trademark, comes from Fair Isaac Corporation, which pioneered the credit rating concept in the late 1950s.)

An individual's credit score, along with his or her credit report, affects his or her ability to borrow money through financial institutions such as banks.

In Canada, the most common ratings are the North American Standard Account Ratings, also known as the "R" ratings, which have a range between R0 and R9. R0 refers to a new account; R1 refers to on-time payments; R9 refers to bad debt.

The factors which may influence a person's credit rating are:^[1]

• ability to pay a loan
• interest
• amount of credit used
• saving patterns^{[not in citation given]}
• spending patterns

Main article: Bond credit rating

The credit rating of a corporation is a financial indicator to potential investors of debt securities such as bonds. These are assigned by credit rating agencies such as Standard & Poor's or Fitch Ratings and have letter designations such as AAA, B, CC.

A sovereign credit rating is the credit rating of a sovereign entity, i.e. a country. The sovereign credit rating indicates the risk level of the investing environment of a country and is used by investors looking to invest abroad.

A short term rating is a probability factor of an individual going into default within a year. This is in contrast to long-term rating which is evaluated over a long timeframe.

Main article: Credit rating agency

Credit scores for individuals are assigned by credit bureaus (US; UK: credit reference agencies). Credit ratings for corporations and sovereign debt are assigned by credit rating agencies.

In the United States, the main credit bureaus are Experian, Equifax, and TransUnion. A relatively new credit bureau in the US is Innovis.^[2]

In the United Kingdom, the main credit reference agencies for individuals are Experian, Equifax, and Callcredit.

In Canada, the main credit bureaus for individuals are Equifax, TransUnion and Northern Credit Bureaus/ Experian.^[3]

The largest credit rating agencies (which tend to operate worldwide) are Moody's, Standard and Poor's and Fitch Ratings.

• de Servigny, Arnaud and Olivier Renault (2004). The Standard & Poor's Guide to Measuring and Managing Credit Risk. McGraw-Hill. ISBN13 978-0071417556. 
• "Credit-Information Reporting: Why Free Speech Is Vital to Social Accountability and Consumer Opportunity" by Daniel Klein, The Independent Review

• Credit risk
• Default (finance)
• Credit history
• Credit score
• Risk-based pricing