June 28, 2019 admin 0Comment

Credit rating determines how creditworthy a company or an institution is. The result from the rating is determined in a rating ratio. Generally, the term comes in the area of ​​companies or startups. Investors recognize by the rating ratio whether the investment makes sense or not. Simplified, it is also called an assessment or classification. Here, too, the credit rating of the company is scrutinized, whereby special rating agencies are commissioned and grades from AAA to D are awarded. This is either an advantage or a disadvantage for the company.

Internal or external credit rating

Internal credit rating happens over the own house bank, whereby only the creditworthiness is examined after conventional procedure. So companies can also be divided into rating classes. Depending on the class and classification, the rating has an influence on the loan conditions. The credit risk is also determined by the credit rating, with lower risk more favorable conditions can be offered.

External credit rating is provided by appropriate rating agencies. Again, the company is valued accordingly, but by independent agencies. The advantage: The result from the agency can be published, which of course makes a very good impression with a positive rating. Investors can thus become directly aware of the company, but it may also be planned to go public. However, the charges of independent rating agencies are disadvantageous. Every year up to 30,000 euros can be incurred here.

Influence of rating on lending

The decision whether to make a loan commitment may depend on the rating result. However, the rating ratio is only a basis for decision-making and does not decide directly on yes or no. In order to make a final commitment, other factors and criteria must be introduced. Existing collateral, the intended purpose and, of course, the volume of credit demanded must still play a role.

How can the credit rating be influenced?

If you want to get a rating for your company, you can prepare for it. All relevant documents should be complete, and agreements must be adhered to. Furthermore, it is important to always be in conversation as a company. The topic of further development and future provides information about upcoming opportunities. It should talk about successes and realistically about failures. Then the rating of the company can be successful.

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