Credit Rating

A Complete Guide To Understanding Types Of Credit Rating

A credit rating is assigned to an individual as per his records and ongoing debts repayments. The better is the ability of a person to repay; the higher will be the credit rating of that particular individual.

Your credit score is an integral part of your credit rating. Your CIBIL score for loan approvals should be 750 or more. This way, you can enjoy lower loan rates and manage reduced EMIs. Types Of Credit Rating are following below.

(1) Bond/debenture rating: A debenture or bond rating is a rating assigned to securities issued by companies, governments, etc.

(2) Equity rating: Equity rating refers to the rating of equity shares issued by a company.

(3) Preference share rating: Preference share rating refers to the rating of shares issued by a company.

(4) Commercial paper rating: The term commercial paper refers to the instruments used for short-term borrowing, whether from manufacturers, lenders, banks, or other financial institutions. Commercial papers are rated by financial institutions. 

(5) Fixed deposits rating: A fixed deposit program is an unsecured medium-term borrowing. These bonds have a fixed deposit rating.

(6) Borrowers rating: Rating of borrowers is referred to as borrower rating.

(7) Individuals rating: The rating of individuals is called an individual’s credit rating.

(8) Structured obligation: Unlike debentures, bonds, and fixed deposit programs, structured obligations are generally assets-backed securities. Credit rating agencies presumed that cash flows from the assets would meet investors’ commitments in worst-case scenarios despite the transaction’s inherent risk.

(9) Sovereign rating: When a loan is being extended or investment is being planned in a country, the country’s rating will be considered.

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