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Q.Explain different grades of CRISIL.

Grade AAA (Highest safety)

Grade rated 'AAA' are judged to offer the highest degree of safety, with regard to
timely payment of financial obligations. Any adverse changes in circumstances are
most unlikely to affect the payments on the instrument. Issuer fundamentally
strong and adverse changes will not affect it

Grade AA (High safety)

Grade rated 'AA' are judged to offer a high degree of safety, with regard to timely
payment of financial obligations. They differ only marginally in safety
from 'AAA' issues. Issuers differs in safety from AAA only marginally

Grade A (Adequate safety)

Grade rated 'A' are judged to offer an adequate degree of safety, with regard to
timely payment of financial obligations. However, changes in circumstances can
adversely affect such issues more than those in the higher rating categories.
Change in circumstances will adversely affect such issues

Grade BBB (Moderate safety)

Grade rated 'BBB' are judged to offer moderate safety, with regard to timely
payment of financial obligations for the present; however, changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay principal
than for instruments in higher rating categories.
Grade BB (Inadequate safety)

Grade rated 'BB' are judged to carry inadequate safety, with regard to timely
payment of financial obligations; they are less likely to default in the immediate
future than instruments in lower rating categories, but an adverse change in
circumstances could lead to inadequate capacity to make payment on financial

Grade B (High risk)

Grade rated 'B' are judged to have high likelihood of default; while currently
financial obligations are met, adverse business or economic conditions would lead
to lack of ability or willingness to pay interest or principal

Grade C (Substantial risk)

Grade rated 'C' are judged to have factors present that make them vulnerable to
default; timely payment of financial obligations is possible only if favourable
circumstances continue

Grade D (Default)

Grade rated 'D' are in default or are expected to default on scheduled payment

Grade NM (Not Meaningful)

Grade rated 'NM' have factors present in them, which render the outstanding rating
meaningless. These include reorganisation or liquidation of the issuer, the
obligation being under dispute in a court of law or before a statutory authority

Other Notes:

CRISIL may apply '+' (plus) or '-' (minus) signs for ratings from 'AA' to 'C' to
reflect comparative standing within the category.

CRISIL may assign rating outlooks for ratings from 'AAA' to 'B'. Ratings on
Rating Watch will not carry outlooks. A rating outlook indicates the direction in
which a rating may move over a medium-term horizon of one to two years. A
rating outlook can be 'Positive', 'Stable', or 'Negative'. A 'Positive' or 'Negative'
rating outlook is not necessarily a precursor of a rating change.

The contents within parenthesis are a guide to the pronunciation of the rating

Factors Affecting Credit Rating

Credit ratings are reports that lenders use to determine an individual's credit risk.
Banks, credit card companies and other lenders retrieve credit ratings on people
from credit reporting agencies. Credit reporting agencies use various factors to
determine credit ratings. These factors can range from credit history to current

Past Credit
An individual's credit history is kept on record for years. Credit agencies use
a series of checks and balances to determine a person's credit rating based on
this history.

Lines of Credit
Having open lines of credit is considered a good thing because it means a
person has established credit. However, too much credit can negatively
affect a credit rating because lenders may consider an individual with too
many lines of credit a potential risk.

Bill Paying

Paying bills on time is the most important factor when determining a credit
rating. Late or delinquent payments can lower a credit rating dramatically.

Current Debt
Outstanding debt plays a part in determining a credit rating. If an individual
has numerous lines of credit or multiple credit cards at or near their
maximum lending limit, it can lower a credit score.
Credit Applications

When a credit report has multiple credit checks or applications for credit in
a short period of time, it sends up red flags to lenders. Adversely, closing
multiple lines of credit rapidly is also cause for concern among lenders.

The US Consumer Protection Credit Protection Act forbids credit reporting agencies
from using your employment history as a consideration in credit rating. But most
lenders use employment history in conjunction with credit reports to determine
credit worthiness.