Credit Rating is rating the credit giving capacity of the company. Credit rating is generally given to the companies of highlight their credit worthiness and generally to the securities issued by companies.

The credit rating are generally given by the high profiled companies and agencies like CARE , ICRA, etc. The ratings vary from AAA, AA , BBB, BA, etc. These credit rating have a great impact on the securities issued by the companies.

Generally, these agency follow strict rules and procedures in granting the rating to the securities. Different agencies have different parameters on which it look at the companies. Some of the common parameters include the financial position of a company, the governance policies, the audit reports, etc.

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The credit score of the company determine whether the company's credit worthiness is good or bad and whether company can repay what it captures from the market. It can significantly affect the business or corporations image. Low credit rating securities and companies find it difficult to raise money from the market and the previous lenders also losses faith and trust from the company.

Thus a good credit score is necessary to raise money from the market in the future to exploit the future opportunities. We have also seen the incidences of how crucial role these credit rating agencies play in the financial market. For eg The Global Crisis of the 2008 is caused by the highly credit ratings given to the securities which were not that capital sound and in turn those companies fail to return the money to the lenders and thus these failure to unmet the obligations on a large scale caused the global depression.

Thus these credit rating agencies have an immense importance. Whenever they lower down the ratings of a company, it causes a volatility in the market. From the corporate governance point of view also these agencies play a much vital role. Smiley face