Credit rating and its significance in Rural Markets
Credit rating is considered as standardized way of measuring the inherent or intrinsic risk of the borrower. A fundamentally sound credit scoring model which is grounded in history but not influenced by the facts that can measure the risk of default and produce consistent results across time and for a wide range of borrowers would simply be an anchor of good credit practice. The credit scoring is scientific methods of assessing the credit risk associated with a new credit application. Scores are calculated by using statistical models that assign points to factors indicative of satisfactory repayment. Models are empirical designed I.e. they are developed entirely from information gained through prior experience. Therefore credit scoring provides an objective risk assessment tool as opposed to a subjective tool they relies or and apprises. The study reveals that credit rating is very useful in the context of market.
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