Credit Score

The Functions Of Credit Rating Agencies

Nowadays a country's financial growth depends on how much its population invest, its annual expenditure and profit. Giving credit has always been in fashion, for it brings in good money to the potential lenders. In the same way it allows consumers to have means to participate largely into the country's financial benefits in this enormous money play, discipline is of prime importance.

Credit bureaus maintain credit records and likewise, credit rating agencies determine the appropriate rates
according to which consumers and lenders work out their dealings. Credit rates provided by credit rating agencies function as guidelines in such cases. The issuers are companies, cities, non-profit organizations, or national governments issuing debt-like securities that can be traded on a secondary market.

It is obvious that credit rates are never the same for everyone. They are set on the basis of risk-based
pricing. Risk-based pricing is a way of price differentiation based on the different expected costs of different borrowers, as set out in their credit rating.

There are more than hundred credit rating agencies around the world. The top listed credit rating agencies that assign credit ratings for corporations and consumers in North America include the following:

* A. M. Best (U.S.)

* Baycorp Advantage (Australia)

* Dominion Bond Rating Service (Canada)

* Equifax (canada)

* Fitch Ratings (U.S.)

* Moody's (U.S.)

* Standard & Poor's (U.S.)

* Egan-Jones Ratings Company (U.S.)