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A Credit rating agency (CRA) is a company that assigns credit ratings for issuers of certain types of debt obligations

as well as the debt instruments themselves. In some cases, the servicers of the underlying debt are also given ratings.

In most cases, the issuers of securities are companies, special purpose entities, state and local governments, non-profit organizations, or national governments issuing debt-like securities (i.e., bonds) that can be traded on a secondary market. A credit rating for an issuer takes into consideration the issuer's credit worthiness (i.e., its ability to pay back a loan), and affects the interest rate applied to the particular security being issued.

Uses of ratings
Credit ratings are used by investors, issuers, investment banks, broker-dealers, and governments. For investors, credit rating agencies increase the range of investment alternatives and provide independent, easy-to-use measurements of relative credit risk; this generally increases the efficiency of the market, lowering costs for both borrowers and lenders. This in turn increases the total supply of risk capital in the economy, leading to stronger growth. It also opens the capital markets to categories of borrower who might otherwise be shut out altogether: small governments, startup companies, hospitals, and universities.

credit rating evaluates the credit worthiness of an issuer of specific types of debt,

specifically, debt issued by a business enterprise such as a corporation or a government. It is an evaluation made by credit rating agency of the debt issuers likelihood of default.[1] Credit ratings are determined by credit ratings agencies. The credit rating represents the credit rating agency's evaluation of qualitative and quantitative information for a company or government; including non-public information obtained by the credit rating agencies analysts. Credit ratings are not based on mathematical formulas. Instead, credit rating agencies use their judgment and experience in determining what public and private information should be considered in giving a rating to a particular company or government. The credit rating is used by individuals and entities that purchase the bonds issued by companies and governments to determine the likelihood that the government will pay its bond obligations. Debts :.

Name and Registered address of Credit Rating Agencies

1. CRISIL Limited CRISIL House Central Avenue Hiranandani Business Park Powai Mumbai 400 076 Tel: + 91 (22) 56913001 09 Fax: + 91 (22) 56913010 Website: Email: 2. Fitch Ratings India Private Ltd. Apeejay House, 6th Floor 3 Dinshaw Vachha Road Churchgate Mumbai 400 020 Tel: + 91 (022) 56370920-23 Fax: + 91 (022) 56370924 Website: 3. ICRA Limited 1105, Kailash Building, 11th Floor 26, Kasturba Gandhi Marg New Delhi 110 001 Tel: + 91 (11) 23357940 50 Fax: + 91 (11) 23357014 Website: Email:

4. Credit Analysis & Research Ltd. (CARE) 4th Floor, Godrej Coliseum Somaiya Hospital Road Behind Everard Nagar Off Eastern Express Highway, Sion (E) Mumbai 400 022 Tel: + 91 (22) 566 02871-73 Fax: + 91 (22) 566 02876 Website: Email:

5. Brickwork Ratings India Private Limited 3rd Floor, Raj Alkaa Park 29/3 & 32/2, Kalena Agrahara Bannerghatta Road, Bangalore 560 076 Tel: +91 (80) 4040 9940 Fax: +91 (80) 4040 9941 Website: Email:


SME Rating Agency of India Ltd. (SMERA) Unit No. 102, 1st Floor Sumer Plaza Marol Maroshi Road Marol Andheri (East)

Mumbai 400 059 Tel: + 91 (22) 67141144-45 Fax: + 91 (22) 67141142 Website: Email:

what Are the Functions of Credit Rating Agencies?

Functioning of credit rating agencies The main activity of credit rating agencies is to issue opinions on the creditworthiness of a particular issuer or financial instrument, or the likelihood that it will honour its financial obligations. Credit ratings are divided up into categories, going from low-risk or investment grade to high-risk or speculative grade. They are based on the revenue stream and balance sheet of the issuer being rated, as well as past financial performance. Many credit rating agencies provide other financial services as well, such as investment advice.

Read more: What Are the Functions of Credit Rating Agencies? |

Credit rating agencies are a broad category of agencies that analyze the finances of various parties to determine how credit worthy they are. This information is used by companies and individuals who offer loans, invest in securities or offer other lines of credit to determine which clients to accept and what interest rates to charge. The three main types of credit agencies each focuses on rating a certain set of entities.

Rating Public Entities


The purpose of one type of credit rating agencies is to evaluate public entities for credit worthiness. They evaluate the history of corporations and other businesses to determine the likelihood they will pay off a loan or other line of credit. These ratings are based on the company's financial ratios, prior earnings and current debts. Financial ratios help interpret information found on a company's financial statements. For example, the ratio of a company's current cash and accounts receivable to its current liabilities helps determine whether the company can pay debts and expenses when they are due . The credit rating established from this information affects whether the corporation will secure a loan and the interest it will pay.

Investment Advice

Credit rating agencies may evaluate the financial instruments offered by different groups. These instruments include bonds and money markets. This rating evaluates how likely these investments are to pay off for investors. These ratings are used by investors in debt securities to determine which bonds or money markets to invest in.

Consumer Credit Agency


A major function of credit agencies is to create consumer credit ratings. These are the credit scores for individuals. The consumer credit rating is based on the individual's past history of debt repayment, current debt-to-income ratio and financial assets. Scores range from 300 to 850, with scores above 700 being considered excellent and scores below 600 indicating high risk for lenders. A high credit score enables individuals to more easily obtain low-interest lines of credit while a low credit score can prevent an individual from obtaining a loan or result in him being offered only a high interest-rate loan. Your credit score will impact whether you are accepted for a credit card, car loan, mortgage, home-equity loan and perhaps whether an application for apartment rental will be accepted. It also affects the interest rate. Those with lower scores receive higher interest-rate offers.

Read more: What Are the Functions of Credit Rating Agencies? |