We use cookies to improve security, personalize the user experience,
enhance our marketing activities (including cooperating with our marketing partners) and for other
business use.
Click "here" to read our Cookie Policy.
By clicking "Accept" you agree to the use of cookies. Read less
What is a Credit Rating Agency? A Comprehensive Legal Overview
Definition & Meaning
A credit rating agency is an organization that assesses the creditworthiness of individuals, companies, or governments. They provide credit ratings through various accessible means, such as online platforms. These agencies typically use quantitative (numerical) and qualitative (descriptive) methods to evaluate credit risks. Their services are often available for a fee, and they may receive payments from issuers, investors, or other market participants.
Table of content
Legal Use & context
Credit rating agencies play a crucial role in the financial and investment sectors. They are often involved in legal matters related to securities regulation, corporate finance, and investment risk assessment. Users may encounter credit rating agencies when seeking to understand the credit ratings of potential investments or when dealing with credit-related legal documents. Legal templates from US Legal Forms can assist users in managing related processes.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
For instance, a company may seek a credit rating from an agency before issuing bonds to attract investors. The agency evaluates the company's financial health and assigns a rating, which helps investors make informed decisions. (hypothetical example)
Relevant laws & statutes
Credit rating agencies are primarily governed by the Securities Exchange Act of 1934, particularly under the provisions related to the registration and regulation of credit rating agencies. Additionally, the Dodd-Frank Wall Street Reform and Consumer Protection Act introduced further regulations to enhance the accountability and transparency of these agencies.
Comparison with related terms
Term
Definition
Key Differences
Credit Rating Agency
An organization that evaluates creditworthiness.
Focuses on ratings for securities and issuers.
Credit Reporting Agency
A company that collects and maintains consumer credit information.
Primarily deals with individual consumer credit histories.
Common misunderstandings
What to do if this term applies to you
If you need to understand credit ratings for investment decisions, consider researching ratings from multiple agencies. You can also explore US Legal Forms for templates that may help you draft necessary documents or agreements related to credit ratings. If your situation is complex, consulting a legal professional may be beneficial.
Find the legal form that fits your case
Browse our library of 85,000+ state-specific legal templates.