List of Top Credit Rating Agencies (CRA) and a Quick Guide on Credit Ratings

List of Top Credit Rating Agencies (CRA) AND a Quick Guide on Credit Ratings

//Credit Rating Agencies (CRAs)//

Credit Rating Agencies (CRAs) assesses, calculates and assigns the credit ratings to the companies, organizations and enterprises. It performs a detailed analysis of financial instruments of various entities. CRAs help lenders and investors determine the potential risk involved in lending money to a particular borrowing entity.

//Credit Ratings//

It depicts the risk involved with investing in debt instruments. The rating scales used by the Credit Rating Agencies are scaled from ‘AAA’ to ‘D’, wherein ‘AAA’ stands for highest ratings and ‘D’ as lowest or Bad Credit Rating.

Similarly, as the  credit score range which is defined by the credit bureaus, wherein any score above 750 and as close to 900 is considered good by the potential lenders.

You may have heard of the CIBIL score which shows how good an Individual is at managing their borrowings. Similarly, Companies who want to borrow get a grade or score known as ‘Credit Rating’. These Ratings are assigned by independent agencies known as ‘Credit Rating Agencies’.

There are 7 Credit Rating agencies in India of which CRISIL, CARE, ICRA and India Ratings are the top ones.

1. Credit Rating Information Services of India Ltd. (CRISIL)
2. Investment Information and Credit Rating Agency of India (ICRA) Ltd.
3. Credit Analysis and Research (CARE) Ltd.
4. Acuite Ratings & Research Ltd.
5. Brickwork Ratings India Private Ltd.
6. India Ratings and Research Pvt. Ltd.
7. INFOMERICS Valuation and Rating Private Ltd.

//What do the agencies look at while assigning a Rating?//

*Quality and strength of Promoter
*Financial strength – Profitability, Net Worth, Ability to Service Debt
*History of borrowing and servicing the loans
*Competition of the Industry and Economic conditions

//What is the rating that is appropriate for Investing?//

Credit ratings are broken down into Investment Grade and Speculative or Junk Rating. Credit ratings from AAA to BBB- are Investment Grade and lower than that are Non-Investment Grade.

In India, the Securities and Exchange Board of India (SEBI) is the primary authority that approves or regulates Credit Rating companies in India and their various functionalities.