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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

               QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                      For the quarter ended March 31, 1997

                         Commission file number 1-13286

                               ------------------

                         DUFF & PHELPS CREDIT RATING CO.
             (Exact name of Registrant as specified in its Charter)

       ILLINOIS                                             36-3569514
(State of Incorporation)                                 (I.R.S. Employer
                                                       Identification No.)

55 East Monroe Street, Chicago, Illinois 60603          (312) 368-3100
   (Address of principal executive offices)     (Registrant's telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.  Yes |X| No. | |

On April 30, 1997, the registrant had 5,072,466 shares of common stock
outstanding.

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<PAGE>

                DUFF & PHELPS CREDIT RATING CO. AND SUBSIDIARIES

                          Quarter Ended March 31, 1997

                                      Index

PART I. -  FINANCIAL INFORMATION

ITEM 1.        Consolidated Financial Statements

               Consolidated Condensed Statements of Income -               1
                    Three Months Ended March 31, 1997 and
                    Three Months Ended March 31, 1996

               Consolidated Balance Sheets -                               2
                    March 31, 1997 and December 31, 1996

               Consolidated Statements of Cash Flows -                     3
                    Three Months Ended March 31, 1997 and
                    Three Months Ended March 31, 1996

               Notes to the Consolidated Financial Statements              4-6

ITEM 2.        Management's Discussion and Analysis of                     7
               Results of Operations and Financial Condition

PART II. - OTHER INFORMATION

ITEM 6.        Exhibits and Reports on Form 8-K                            8
<PAGE>

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

                DUFF & PHELPS CREDIT RATING CO. AND SUBSIDIARIES

                  CONSOLIDATED CONDENSED STATEMENTS OF INCOME
                     (In Thousands, Except Per Share Data)
                                  (Unaudited)

                                                     Three Months  Three Months
                                                         Ended        Ended
                                                       March 31,     March 31,
                                                         1997         1996
                                                     ------------  ------------

REVENUES (Note 1)                                      $14,395      $12,238

EXPENSES
   Employment expense                                    6,124        5,161
   Other operating expenses                              2,942        2,379
   Name usage fees--paid to former parent (Note 2)         500          500
   Depreciation and amortization (Note 1)                  536          502
                                                     ------------  ------------
Total expenses                                          10,102        8,542

OPERATING INCOME                                         4,293        3,696

  Other income                                             178           37
  Interest expense (Note 3)                                119          125
                                                     ------------  ------------

EARNINGS BEFORE INCOME TAXES                             4,352        3,608

  Income taxes                                           1,836        1,536
                                                     ------------  ------------

NET EARNINGS                                           $ 2,516      $ 2,072
                                                     ============  ============

Weighted average shares outstanding (Note 1)             5,665        5,871

EARNINGS PER SHARE (Note 1)                            $  0.44      $  0.35


                                       1

       The accompanying notes to the consolidated financial statements are
                     an integral part of these statements.
<PAGE>

                Duff Phelps Credit Rating Co. and Subsidiaries

                           Consolidated Balance Sheets
                                 (In Thousands)

                                                       March 31,    December 31,
                                                         1997          1996
                                                      -----------   -----------
                                                      (Unaudited)
ASSETS

CURRENT ASSETS:
   Cash and cash equivalents                             $   251       $     0
   Accounts receivable, net of allowance for
      doubtful accounts of $246 and $219,
      respectively                                        10,363        10,298
   Other current assets                                      497           642
                                                       ----------    -----------
   Total current assets                                   11,111        10,940

OFFICE FURNITURE, EQUIPMENT AND LEASEHOLD
IMPROVEMENTS,
net of accumulated depreciation of $3,315 and
  $3,042 respectively (Note 1)                             4,516         4,540


OTHER ASSETS:
  Intangible assets, net (Note 1)                          2,243         2,319
  Goodwill, net (Note 1)                                  22,907        23,094
  Other long-term investments                              1,113         1,019
  Other long-term assets                                     231           214
                                                       ----------    -----------
  Total assets                                           $42,121       $42,126
                                                       ==========    ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accrued compensation and employment taxes              $ 2,126       $ 5,756
  Accounts payable                                         3,597         3,193
  Accrued income tax                                       1,592           576
  Advance service fee billings to clients (Note 1)         1,671         1,314
  Other current liabilities                                   14            15
                                                       ----------    -----------
  Total current liabilities                                9,000        10,854

LONG-TERM DEBT                                             7,500         5,500

OTHER LONG-TERM LIABILITIES                                  717           717

STOCKHOLDERS' EQUITY:
  Preferred stock, no par value: 3,000 shares
    authorized, zero issued and outstanding                    0             0
  Common stock, no par value: 15,000 shares
    authorized, 5,076 and 5,152 shares issued
    and outstanding at March 31, 1997 and
    December 31, 1996, respectively                        2,518         5,030
  Retained earnings                                       22,386        20,025
                                                       ----------    -----------

  Total stockholders' equity                              24,904        25,055
                                                       ----------    -----------

  Total liabilities and stockholders' equity             $42,121       $42,126
                                                       ==========    ===========


                                       2

       The accompanying notes to the consolidated financial statements are
                      an integral part of these statements.
<PAGE>

                DUFF & PHELPS CREDIT RATING CO. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In Thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                         For the Three Month
                                                            Period Ended
                                                         March 31,     March 31,
                                                          1997           1996
                                                         --------      --------
CASH FLOWS FROM OPERATING ACTIVITES:

<S>                                                      <C>           <C>
   Net earnings                                          $ 2,516       $ 2,072
   Decrease (increase) in accounts receivable                (65)        1,656
   Decrease in accrued compensation and employment taxes  (3,630)       (2,764)
   Increase (decrease) in advance service billings           357           (80)
   Depreciation and amortization                             536           502
   Increase in accrued income taxes payable                1,238           392
   Increase in other assets and liabilities - net            564          (153)
                                                         -------       -------
 Cash provided by operating activities                     1,516         1,625
                                                         -------       -------

CASH FLOWS FROM INVESTING ACTIVITIES:

   Increase in other long term investments                   (94)          (78)
   Purchase of office furniture, equipment
     and leashold improvements-net of retirements           (248)         (528)
                                                         -------       -------
 Cash used in investing activities                          (342)         (606)
                                                         -------       -------

CASH FLOWS FROM FINANCING ACTIVITIES:

   Dividend paid to shareholders                            (154)         (165)
   Deferred financing costs                                  (17)            7
   Issuances of common stock                                 416            75
   Repurchases of common stock & common
     stock equivalents                                    (3,168)         (768)
   Increase of long-term debt                              4,000           500
   Decrease of long-term debt                             (2,000)         (500)
                                                         -------       -------
Cash used in financing activities                           (923)         (851)
                                                         -------       -------

NET CHANGE IN CASH                                           251           168
 
CASH, BEGINNING OF PERIOD                                      0           233
                                                         -------       -------

CASH, END OF PERIOD                                      $   251       $   401
                                                         =======       =======
</TABLE>


                                       3

       The accompanying notes to the consolidated financial statements are
                      an integral part of these statements.
<PAGE>

DUFF & PHELPS CREDIT RATING CO. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


1    SIGNIFICANT ACCOUNTING POLICIES:

General

     Duff & Phelps Credit Rating Co. (the "Company") is an internationally
recognized credit rating agency which provides ratings and research on
corporate, structured and sovereign financings, as well as insurance claims
paying ability. The Company has offices in Chicago, New York, London and Hong
Kong and operates directly or through international partners in North and South
America, Europe, Asia and Africa. The Company is also a designated rating agency
in Japan.

     On October 31, 1994, the spin-off of the Company from its former parent
company, Phoenix Duff & Phelps Corporation, formerly Duff & Phelps Corporation
("D&P"), was finalized. The Company's shares, held by D&P, were distributed
October 31, 1994, to D&P shareholders as a tax-free distribution. D&P
shareholders received one of the Company's shares for every three shares held of
D&P. The distribution resulted in the Company operating as a free standing
entity whose common stock is publicly traded on the New York Stock Exchange
under the ticker symbol "DCR."

Basis of Presentation

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions. These estimates affect the reported amounts of assets, liabilities
and disclosure of contingent assets and liabilities at the date of the financial
statements. In addition, they affect the reported amounts of revenues and
expenses during the period. Actual results could differ from those estimates.

     The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles and include those
assets, liabilities, revenues and expenses directly attributable to the
Company's operations in the years presented.

Principles of Consolidation

     During July 1994, the Company organized a U.S. subsidiary, Duff & Phelps
Credit Rating Co. of Europe, with an office located in London, England. In July
1996, the Company organized a U.S. subsidiary, Duff & Phelps Credit Rating Co.
of Asia, with an office in Hong Kong. The consolidated financial statements
include the accounts of the Company and its wholly owned subsidiaries, Duff &
Phelps Credit Rating Co. of Europe and Duff & Phelps Credit Rating Co. of Asia.
All significant intercompany balances have been eliminated.

Earnings Per Share

     Fully diluted earnings per share were computed using the weighted average
number of shares of common stock and common stock equivalents outstanding.
Common stock equivalents are based on outstanding stock options under a
non-qualified stock option plan.


                                       -4-
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Revenue Recognition

     Rating revenues are typically recognized when services rendered for credit
ratings are complete, generally when billed. Revenues are dependent, in large
part, on levels of debt issuance. The Company's fee schedule depends on the type
and amount of securities rated and the complexity of securities issued. Research
revenues are billed in advance and amortized over the subscription period.

Goodwill and Intangible Assets

     In 1987, an acquisition of the former parent resulted in goodwill and
intangible assets allocated to the Company of approximately $5.0 million and
$6.0 million, respectively. In 1989, another acquisition of the former parent
resulted in a "push-down" of goodwill to the Company of approximately $24.0
million.

     Goodwill and intangible assets are shown net of accumulated amortization.
Goodwill is amortized over its estimated remaining life of approximately 31
years, and intangible assets are amortized over remaining lives of 4 through 12
years.

     The Company periodically evaluates whether significant events have occurred
which may require a revision of the estimated useful life of goodwill and
intangible assets or an impairment of the recoverability of remaining balances.
The Company uses an estimate of future undiscounted cash flows over the
remaining useful life of goodwill and intangible assets to measure
recoverability as required by Statement of Financial Accounting Standards
("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of."

Depreciation and Amortization

     Office furniture and equipment are stated at cost less accumulated
depreciation and are depreciated on a straight-line basis over the estimated
remaining lives of the assets, which, on a composite basis, is five years.
Leasehold improvements are amortized over the remaining lives of the related
leases, which, on a composite basis, is 11 years.

New Accounting Pronouncements

     Recently the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 ("SFAS 128") which changes the disclosure
of earnings per share ("EPS") data. SFAS 128 replaces the presentation of
"primary" EPS with "basic" EPS. Under SFAS 128 "diluted" EPS, the dilutive
effect of outstanding share options is computed similarly to "fully diluted"
EPS. Under SFAS 128 shares outstanding are computed using the "average share
price" for the period rather than the "greater of the average share price or end
of period share price." By these standards the pro forma basic EPS for this
period would be $0.49 per share for 5,109,558 average shares outstanding and the
pro forma diluted EPS would be $0.44 per share for 5,632,400 shares. SFAS 128 is
effective for financial statements issued for periods ending after December 15,
1997.

2    RELATED PARTIES:

Service Fees Paid to D&P

     A name use fee agreement in effect between the Company and D&P of $2
million per year is included in the Company's financial results for the periods
presented. Effective September 30, 2000, the name use fee reduces to $10
thousand per year.


                                       -5-
<PAGE>

Service Fees Paid to the Company

     The Company and D&P are parties to service and support agreements under
which the Company provides D&P with fixed income research services for an annual
fee of $0.9 million and administrative services for a fee that represents actual
expenses incurred by the Company on behalf of D&P. For the years presented, the
fixed-income research fees are included in revenue, and the administrative
support fees offset other operating expenses. The fixed income research
agreement expires on September 30, 2000.

3    LONG-TERM DEBT AND SUPPLEMENTAL CASH FLOWS INFORMATION:

     Long-term debt obligations were $7.5 and $5.5 million, bearing interest of
6.4 percent and 6.3 percent, for the periods ended March 31, 1997 and December
31, 1996, respectively. Cash interest and fees paid were $.1 million for three
months ended March 31, 1997 and 1996.

     Dividends paid totaled $0.2 million, and share repurchases of 120,350
amounted to $3.2 million during the first quarter of 1997.

     Income taxes paid were $.6 million during the first quarter of 1997 and
$1.1 million in the first quarter of 1996.

4    LITIGATION MATTERS:

     During 1993, several legal actions were filed against the Company in
federal court by holders of secured promissory notes ("Notes") of Towers
Financial Corporation ("Towers") and holders of bonds ("Bonds") issued by
subsidiaries of Towers in five structured financing transactions. Towers
collapsed in 1993 amid allegations of massive fraud and is in bankruptcy. The
Company had rated the Bonds but had not rated the Notes. It is alleged that $245
million of Notes were sold that are worthless and that $200 million of Bonds
were sold that have lost much or all of their value. Directors and officers of
Towers, lawyers, accountants, broker-dealers and the indenture trustee for the
Bonds were also named as defendants in one or more of the actions. The
plaintiffs in the actions contend that the Company and the other defendants are
liable for losses the plaintiffs have suffered and for punitive damages. The
holders of the Bonds also sought recovery from the Company of treble damages
under the Racketeer Influenced and Corrupt Organizations Act ("RICO"). It is
asserted that the Company, in its ratings and its monitoring of the transactions
after ratings were issued, was either fraudulent or negligent in failing to
discover the alleged fraud of Towers and its officers or in taking other action
that allegedly induced purchases of the Bonds and the Notes. The Company denies
these assertions. The Company's ratings were based upon (and assumed the
accuracy of) the information provided to it by Towers and its officers. The
Company has taken the position that it cannot be expected to detect fraud or
discover variances from the structure of a rated security when the information
provided to it demonstrates compliance with that structure. In 1996, the legal
actions filed by the holders of the Notes were dismissed by the federal courts
and the RICO claim of the holders of the Bonds was dismissed. One holder of
Notes claiming to represent holders of approximately $17 million of Notes filed
a class action against the Company in Illinois state court alleging the state
law claims previously asserted in federal court.

     Management intends to vigorously defend these actions, and at this time,
cannot make an assessment with regard to such litigation's effect on the
Company's financial position or results of operations. The Company is involved
in other litigation, which in the opinion of management, would not have a
material adverse effect on the Company's financial position or results of
operations.


                                       -6-
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
        FINANCIAL CONDITION

RESULTS OF OPERATIONS

                 THREE MONTHS ENDED MARCH 31, 1997 COMPARED WITH
                        THREE MONTHS ENDED MARCH 31, 1996

     Revenues for the three months March 31, 1997, were $14.4 million, an
increase of 18 percent, or $2.2 million over the $12.2 million recorded in the
corresponding period in 1996. Rating revenues accounted for $2.4 million of the
increase and were offset by a decline in other revenues.

     The growth in revenues and earnings was the result of strong performance by
both the corporate and structured finance rating businesses, which posted 13
percent and 33 percent revenue increases, respectively. The Company's corporate
rating business achieved higher revenues due to the addition of new clients and
due to higher renewal revenues despite the continuing moderate level of
financing activity. The structured finance revenue increase was primarily
contributed by the on-going strong performance of the mortgage-backed and
asset-backed sectors. The Company's international business, which is
incorporated in the corporate and structured revenue comparisons above, also
exhibited strong revenue growth.

     For the quarter ending March 31, 1997, operating expenses were up 18
percent primarily reflecting higher compensation expense from added staff and
higher other operating expense; which includes the Hong Kong office opened in
mid 1996.

     Net earnings for the first quarter of 1997 increased approximately 19
percent to $2.5 million, while earnings per share were $0.44 compared with $0.35
in 1996.

LIQUIDITY AND CAPITAL RESOURCES

     Capital expenditures totaled $0.2 million for the first quarter of 1997 and
are anticipated to be approximately $1.8 million for the year ending December
31, 1997. Capital expenditures are primarily for leasehold improvements to
accommodate the increase in staff, computer equipment and office fixtures for
office expansion.

     Dividends paid totaled $0.2 million in the first quarter of 1997, and share
repurchases of 120,350 during the first quarter amounted to $3.2 million.

     The Company has in place a $20.0 million revolving credit agreement, which
expires December 31, 1999. As of March 31, 1997, $7.5 million was outstanding
under the facility at a floating rate of approximately 6.4 percent. Commitment
fees are accrued on the unused facility at a rate of .25 percent and are paid
quarterly. The credit agreement contains certain financial covenants which the
Company is currently in compliance with.

     The Company believes that funds provided by operations and amounts
available under its credit agreement will provide adequate liquidity for the
foreseeable future.


                                       -7-
<PAGE>

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This report contains forward-looking statements that are subject to risks and
uncertainties, including but not limited to the following: the Company's
performance is highly dependent on corporate debt issuances and structured
finance transactions, which may decrease for any number of reasons including
changes in interest rates and adverse economic conditions; the Company's
performance is affected by the demand for and the market acceptance of the
Company's services; and the Company's performance may be impacted by changes in
the performance of the financial markets and general economic conditions.
Accordingly, actual results may differ materially from those set forth in the
forward-looking statements. Attention is also directed to other risk factors set
forth in documents filed by the Company with the Securities and Exchange
Commission.

PART II. OTHER INFORMATION

ITEM 6.   Exhibits and Reports on Form 8-K

         Exhibit No.      Description
         -----------      -----------
            10.11         Second Amendment to Credit Agreement among
                          Duff & Phelps Credit Rating Co., various financial
                          institutions and Bank of America Illinois.


                                       -8-
<PAGE>

                                    SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                    Duff & Phelps Credit Rating Co.


May 12, 1997                        /s/ Marie C. Becker, Chief Accounting
                                    -------------------------------------------
                                    Marie C. Becker, Chief Accounting
                                      Officer/Controller