What Credit Ratings Are, And Are Not

Credit ratings are forward-looking opinions about credit risk.

Standard & Poor’s credit ratings express our opinion about the ability and willingness of an issuer, such as a corporation or state or city government, to meet its financial obligations in full - and on time.

Beyond that, credit ratings can also speak to the credit quality of an individual debt issue, such as a corporate note, a municipal bond or a mortgage-backed security, and the relative likelihood that the issue may default.

Ratings are provided by organizations such as Standard & Poor’s, commonly called credit rating agencies, which specialize in evaluating credit risk. At Standard & Poor’s, our mission is to provide high-quality, independent, and rigorous analytical information to the marketplace.

Each agency applies its own methodology in measuring creditworthiness and uses a specific rating scale to publish its ratings opinions. Typically, ratings are expressed as letter grades that range, for example, from ‘AAA’ to ‘D’ to communicate the agency’s opinion of relative level of credit risk.

For more information view the detailed Ratings Definitions

Guide to Credit Rating Essentials
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