Analysis A credit rating is an assessment by a third party of the creditworthiness of an issuer of financial securities. It tells investors the likelihood of default, or non-payment, by the issuer of its financial obligations.
Credit analysis is the financial analysis used to determine the creditworthiness of an issuer.
It examines the capability of a borrower, or issuer of financial obligations, to repay the amounts owing on schedule or at all. Establishing the creditworthiness of borrowers is one of the oldest established financial activities known. Through history, the act of lending funds has been accompanied by an examination of the ability of the borrower to repay the funds. The most ancient civilizations and societies known to us often show development of sophisticated trading and banking activities. The medieval bankers of Europe were thorough in their examination of their clients' affairs and often decided the outcome of wars and the fate of monarchies with their financing.