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Credit rating has long been invaluable to businesses, whether they’re significant multinationals or entrepreneurial startups.
A sound corporate credit rating is essential when a new business owner needs a loan in the company name, while suppliers and potential investors rely on credit ratings to clarify whether it’s worth investing their professional resources in an enterprise.
Who are the best rating agencies, and what defines excellence in this category?
1. KBRA
Kroll Bond Rating Agency began operations in 2010. Despite this, KBRA has quickly become an elite international full-service rating agency and holder of the prestigious 2024 Ratings Provider of the Year award. KBRA is now a recognized alternative to time-honored rating agencies.
Though the agency is only in its second decade of operation, its founder, Jules Kroll, is a long-standing expert in the corporate security sector with a prestigious history in risk mitigation. With Kroll heading an experienced leadership team, New York-based KBRA readily provides applications and data-driven analytics businesses can trust. Its extensive understanding of ABS methodology has resulted in almost 80,000 issued ratings.
KBRA approaches risk assessment by providing efficient and transparent ratings that businesses and the investment community can trust and use as tools and insights to make the most informed choices and decisions.
2. S&P Global Ratings
Henry Varnum Poor, founder of Standard and Poor’s Corporation, published the “History of Railroads and Canals” in 1860, the pathfinder to securities analysis and reporting. Well-known for its S&P 500 market index, an indicator in the U.S. economic sector, S&P Global Ratings has long been an investment analysis standard worldwide.
S&P Global offers thousands of investment customers data and insights with its internationally recognized letter-based rating system. Subscribers can make educated decisions based on this transparent feedback, making the company an international standard in critical financial analysis among many businesses and investors.
With over 150 years of experience in market opinion and more than a million ratings issued, S&P Global offers public, private and confidential ratings that drive market growth and clarity for its clientele.
3. Moody’s Ratings
Now in its 116th year of operation, this New York-based financial services giant has 36 offices globally and covers over 135 countries. With a recent expansion to include climate risk analysis and sustainable financial assessments, Moody’s has grown with the times. The company’s strong international visibility makes it one of the world’s leading credit agencies.
When John Moody and Company first published “Moody’s Manual,” including fundamental stock and bond statistics, back in 1900, the Moody’s pioneer could not have envisioned its national publication status three years later. After the 1907 stock market crash, he founded Moody’s Investors Service, rating government bond markets.
With such a notable history, it came as no surprise when Moody’s, in its current iteration, grew to become one of the planet’s most notable full-scale credit rating agencies, catering to the needs of multitudes of business and investor clients.
4. Fitch Ratings
Fitch Ratings, with S&M Global and Moody’s, is one of the world’s “Big Three” credit rating agencies. Since its inception on Christmas Eve in 1914, Fitch Ratings has grown to provide ratings for over 20,000 sovereign countries, corporations and financial institutions globally.
With rating scales similar to the other two established agencies, Fitch now offers AI data analytics and sustainable finance evaluation. At 36 worldwide offices, the now entirely Hearst Corporation-owned company provides business creditworthiness ratings for some of the world’s best-known names in investment and corporate circles.
Fitch Ratings promises its clients a different way of looking at financial insights and commentary to create value beyond only information and data. The company is in a good position to continue providing businesses and its partners impactful rating insights well into the future.
5. R&I
Rating and Investment Information, Inc., is a credit rating agency founded and based in Tokyo, with an office in Hong Kong. Since 1975, the company has firmly established itself in providing rating services, investment appraisals and information services. R&I has more recently cemented itself as a world leader in environmental, social and governance investing.
R&I assigns ratings to various clientele, including financial institutions, corporations, governments, affiliated government agencies and private business entities. It also provides evaluations and opinions on green, social and sustainability finance, alongside credit risk management data to banks, securities businesses and asset management companies.
As a Japanese firm, R&I displays an international presence and a commitment to its global clients and partners.
6. Morningstar DBRS
Hailing from Toronto, Morningstar DBRS is a credit rating market leader in its home country, the U.S. and across Europe. DBRS, a division of the Morningstar holding company, is among the largest credit rating agencies globally. Its transparent and independent data, research and ratings provide value to sovereign countries, corporate concerns and financial institutions worldwide.
Morningstar DBRS President Detlef Scholz oversees 700 employees in eight international offices. Using an established and comprehensive rating methodology, DBRS also offers expertise in several specialized sectors, including global insights, corporate credit and structured finance.
Founded as Dominion Bond Rating Service in 1976, the company has experienced further growth under the Morningstar banner. Its innovative insights into credit rating environments offer value to thousands of investment entities and corporations.
7. JCR
Japan Credit Rating Agency, Ltd., is Japan’s leading credit rating agency, covering over half of the country’s 1,100 public sector issuers. It has operated since the mid-1980s and includes the U.S., U.K., EU and parts of Asia among its official registrations. JCR is a globally recognized firm with ratings used in major markets abroad.
With a particularly dominant presence in the financial sector, JCR provides crucial financial market data and information to its clientele. This leading Japanese agency has recently expanded to include sustainable finance advice and evaluations.
Led by President Shokichi Takagi, JCR is further globally expanding in the sustainable development sector to provide accurate external sustainable finance evaluations while still honoring its extensive business and investment client base.
8. Crisil
Affiliated with S&P, the Credit Rating Information Services of India Limited is India’s most renowned credit rating agency. Its presence spans 21 cities in nine countries globally, and with over 75,000 issued ratings, Crisil has established itself in the global ratings industry since its founding in 1987.
Crisil’s presence extends beyond credit ratings into global analytics, with the company’s risk assessment model, among other tools, becoming an industry standard. Led by Managing Director and CEO Amish Mehta, the Indian giant excels through partnerships with 15 top investment banks and 35 elite commercial ones.
Crisil prides itself on delivering mission-critical insights to investors, corporations and business partners, using the latest thinking to confidently provide its data and solutions.
9. AM Best
Known as the oldest and largest credit rating agency specializing in insurance worldwide, AM Best conducts business in over 100 countries. Its New York headquarters started in a single office in 1899, with AM Best now boasting regional centers in six international cities.
While also handling research and analysis, AM Best’s credit rating section deals with the reporting and creditworthiness of 16,000 insurance companies globally. Other clients include investors, agents, brokers, policyholders, regulators and educators.
AM Best strengthens the insurance industry’s solvency, sustainability and stability by ensuring its stakeholders’ well-being and economic support.
What Makes a Credit Rating Agency Valuable?
Credit rating agencies differ from credit reporters, which deal with individual credit scores. A credit rating agency provides investors, creditors and lenders with researched feedback that determines a business’ financial risk or viability.
They don’t stop with businesses — global rating agencies even report on the performance and creditworthiness of countries and governments. They assess and report on reserves and investments to establish a nation’s economic stability.
Why Credit Ratings Are Important
A solid credit rating can distinguish between success and failure in corporate business and financial investment. Lenders lean on credit ratings to establish a business’ creditworthiness before approving or rejecting loan applications, with loan success challenging in the business world recently.
Startup businesses, especially, need loans to experience revenue growth, as over half of new startup firms experienced losses in 2023. Most successful loan applicants secured borrowings through finance companies, credit unions and smaller banking establishments.
New entrepreneurs tend to confuse credit ratings and credit scores, which are entirely different grading systems. While an entrepreneur’s credit score affects their personal creditworthiness, their firm’s credit rating is vital to securing a business loan. Credit agencies assign ratings based on business debt generation and payment history. Suppliers or investors use these as primary data to assess lending or credit value.
Making Informed Credit Rating Agency Choices
With many excellent rating agency options available, choosing the best one for your business means assessing the most vital factors for the enterprise. Using an up-and-coming, vibrant agency with modern ideas may make more sense to a newly established startup business, but maybe a seasoned, age-tested credit rating agency will provide more conventional and conservative feedback.
Follow up with business-specific requirements and priorities to find the credit rating agency that best suits your company’s needs.
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