What is Credit Rating?

Credit rating is the process of evaluating and assessing the credit quality of a particular entity, in order to form an opinion about their ability and willingness to honor their financial obligations when they fall due.  It also describes the creditworthiness of a particular borrower and how likely the debt will be paid.

MERatings follows a rigorous, unbiased and systemic procedure to arrive at a rating opinion with the help of a Rating Model, Qualitative and Quantities aspects of an entity along with its ownership, governance structure of the organization, management and control environment and evaluation of business/financial risks.

Benefits of Credit Rating for Entities:

  • Improves Corporate Image: Credit rating can help improve the corporate image of an entity. A High credit rating will create confidence amongst investors about the entity.
  • Lowers Cost of Borrowing: Entities with a high credit rating can obtain capital at lower costs from the market.
  • Act as a Marketing Tool: Credit rating not only helps to develop a good image of the entity among the investors, but also among the customers, dealers, suppliers, etc. High credit rating can act as a marketing tool to develop confidence in the minds of customers, dealer, suppliers, etc.
  • Helps in Growth and Expansion: Credit rating enables an entity to grow and expand. This is because better credit rating will enable an entity to get finance easily for growth and expansion.