Credit ratings

Credit ratings are assessments of a person’s or organization’s ability to repay borrowed money. They are given by credit bureaus and financial institutions, using letters like AAA or B-, which indicate the level of risk involved in lending to that individual or entity. Higher ratings mean lower risk and often lead to better loan terms, such as lower interest rates. Conversely, lower ratings suggest higher risk, potentially resulting in higher costs or difficulty obtaining credit. Credit ratings help lenders decide whether to lend money and on what terms, fostering transparency in lending decisions.