Investing is risky.
To lessen the risk, one needs to check out the score given by a credit rating agency.
The score is based on the comprehensive evaluation of a company's financial balance sheet strength, its operations and its business profile.
However, one needs to know that investing in a company that has a great credit score is not an assurance nor is it a warranty.
Actually, what it does is it affects the loan amount approved and released.
Plus the interest rates are lower if the credit rating sore is higher.
It can affect the intention of an investor on whether or not they would still want to proceed with the investment.
A company that has a high rating will always have a distinct advantage over those who have a lower score.
That is why the job of a credit rating agency is crucial and companies pay these agencies to rate them.
That is why companies work hard to have a great rating because it will pay off in the end.
The ratings are actually being taken a looked at by a number of people: investors, investment banks and dealers, debt issues and regulators.
It tells them whether the company is a healthy risk.
It is a risk that will be worth their time and money.
It is the only way by which they can protect their investment and foresee the future, although it is not a guarantee.
That is why the influence of these agencies is continuing to grow.