credit rating

A credit rating is an assessment of how likely someone or a company is to repay borrowed money on time. It is usually expressed as a credit score or a letter grade, based on their financial history, including past loans, debts, and bill payments. A high rating indicates reliability and low risk for lenders, making it easier and often cheaper to borrow money. Conversely, a low rating suggests higher risk, which can lead to higher interest rates or difficulty obtaining credit. Credit ratings help lenders decide whether to approve loans and under what terms.