Beyond the Score: The Business of Credit Ratings Explored
When deciding which friend to financially assist with $2,000, one might consider trustworthiness and financial behavior, similar to how a credit rating agency assesses a company or nation’s ability to repay debt. Credit rating agencies emerged in the 19th century to support investors in railway companies by evaluating the creditworthiness of business ventures. These agencies play a crucial role in today’s debt markets by providing ratings that influence lending decisions. Despite their importance, the industry has faced criticism and calls for regulatory reform, particularly after the 2008 financial crisis highlighted issues like conflicts of interest and the accuracy of ratings.
