Credit Rating Methodology

From Open Risk Manual

Definition

Credit Rating Methodology is an analytic framework (set of considerations, analyses, tools, models and algorithms) that underpin the generation (assignement) of a Credit Rating.

Methodology Components

Credit rating methodologies vary significantly by the market segment (type of issuer) that is being rated. This reflects:


Indicative components:


The above elements are usually brought together an overall operational [[Credit Rating Process] including any models or tools, intermediate results or assessments, iterative fact finding etc. culminating into a final placement in one or more credit rating scales within a concrete Credit Rating System and an eventual Credit Rating Report.


Issues and Challenges

  • Methodologies for different market segments and asset classes can be very inconsistent with each other


See Also

Contributors to this article

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