Investing Dictionary
Options & Bonds

What is Credit Rating?

A grade for how likely a borrower is to repay their debt

Full Explanation

Agencies like Moody's, S&P, and Fitch rate bonds from AAA (safest) to D (in default). Higher-rated bonds pay lower interest. Junk bonds (below BBB) pay higher interest because they're riskier.

Pro Tip

If a company's credit rating gets downgraded to junk, its stock usually tanks and borrowing costs spike.

Related Options & Bonds Terms

Put Option

A contract giving you the right to sell a stock at a set price

Strike Price

The price at which an option lets you buy or sell

Yield Curve

A graph showing interest rates at different loan lengths

Bond

A loan you give to a company or government that pays you interest

View all Options & Bonds terms →

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