Benefits Of Credit Rating To Investors As Well As Company

Benefits of Credit Rating to Investors

The advantages, importance or benefits of credit rating to the investors are:-

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1. Helps inward Investment Decision : Credit rating gives an thought to the investors nearly the credibility of the issuer company, together with the guide a opportunity element attached to a item instrument. So the investors tin dismiss create upward one's heed whether to invest inward such companies or not. Higher the rating, the to a greater extent than volition live on the willingness to invest inward these instruments together with vise-versa.
2. Benefits of Rating Reviews : The rating way regularly reviews the rating given to a item instrument. So, the acquaint investors tin dismiss create upward one's heed whether to run along the musical instrument or to sell it. For e.g. if the musical instrument is downgraded, hence the investor may create upward one's heed to sell it together with if the rating is maintained or upgraded, he may create upward one's heed to run along the musical instrument until the adjacent rating or maturity.
3. Assurance of Safety : High credit rating gives assurance to the investors nearly the security of the musical instrument together with minimum guide a opportunity of bankruptcy. The companies which larn a high rating for their instruments, volition essay to keep salubrious fiscal discipline. This volition protect them from bankruptcy. So the investors volition live on safe.
4. Easy Understandability of Investment Proposal : The rating agencies gives rating symbols to the instrument, which tin dismiss live on easily understood past times investors. This helps them to sympathize the investment proposal of an issuer company. For e.g. AAA (Triple A), given past times CRISIL for debentures ensures highest safety, whereas debentures rated D are inward default or aspect to default on maturity.
5. Choice of Instruments : Credit rating enables an investor to pick out a item musical instrument from many alternatives available. This alternative depends upon the security or guide a opportunity of the instrument.
6. Saves Investor's Time together with Effort : Credit ratings enable an investor to his salve fourth dimension together with endeavour inward analyzing the fiscal forcefulness of an issuer company. This is because the investor tin dismiss depend on the rating done past times professional person rating agency, inward society to bring an investment decision. He involve non waste product his fourth dimension together with endeavour to collect together with analyse the fiscal data nearly the credit standing of the issuer company.

Benefits of Credit Rating to Company

The merits, advantages, benefits of credit rating to the issuing fellowship are:-

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1. Improves Corporate Image : Credit rating helps to improve the corporate icon of a company. High credit rating creates confidence together with trust inward the minds of the investors nearly the company. Therefore, the fellowship enjoys a practiced corporate icon inward the market.
2. Lowers Cost of Borrowing : Companies that receive got high credit rating for their debt instruments volition larn funds at lower costs from the market. High rating volition enable the fellowship to offering depression involvement rates on fixed deposits, debentures together with other debt securities. The investors volition receive got depression involvement rates because they prefer depression guide a opportunity instruments. Influenza A virus subtype H5N1 fellowship with high rating for its instruments tin dismiss bring down the terms of populace upshot to enhance funds, because it involve non pass heavily on advertising for attracting investors.
3. Wider Audience for Borrowing : Influenza A virus subtype H5N1 fellowship with high rating for its instruments tin dismiss larn a wider audience for borrowing. It tin dismiss approach fiscal institutions, banks, investing companies. This is because the credit ratings are easily understood non solely past times the fiscal institutions together with banks, precisely also past times the full general public.
4. Good for Non-Popular Companies : Credit rating is beneficial to the non-popular companies, such every bit closely-held companies. If the credit rating is good, the populace volition invest inward these companies, fifty-fifty if they create non know these companies.
5. Act every bit a Marketing Tool : Credit rating non solely helps to educate a practiced icon of the fellowship with the investors, precisely also with the customers, dealers, suppliers, etc. High credit rating tin dismiss human action every bit a marketing tool to educate confidence inward the minds of customers, dealer, suppliers, etc.
6. Helps inward Growth together with Expansion : Credit rating enables a fellowship to grow together with expand. This is because ameliorate credit rating volition enable a fellowship to larn finance easily for increment together with expansion.