Words explained

credit rating

A credit rating is a letter grade assigned by a private company that studies how likely a borrower is to repay its debts. A higher grade means the borrower is considered safer and a lower grade means there is more chance they might not pay.

Words beside it

• credit risk

  Credit risk is the chance that the person or organization you lent money to will not pay you back as promised. A higher credit risk means there is a greater possibility of losing some or all of your money.

• Credit score

  A number lenders use to guess whether you pay. Driven mostly by paying on time and using little of your available credit.

• Credit spread (options)

  Selling one option and buying another further out, collecting a net premium with a capped loss.

• full faith and credit

  Full faith and credit is a phrase meaning the United States government officially promises to repay a debt using all of its resources and legal authority. It is considered one of the most reliable guarantees a borrower can give because the government can raise taxes or print money to honor the promise.

• Net operating income (NOI)

  A property's rent minus operating costs, before the mortgage.

• rating agency

  A company that studies how likely a borrower is to pay back their debts and gives them a grade, similar to how a teacher grades a student. Examples include Moody's and S&P Global Ratings.

• separating business and personal money

  This means keeping a business's money in its own bank account and card, apart from your own. Money only moves between them on purpose, with a note about why.

• tax credit

  This is an amount that directly lowers the tax you owe, dollar for dollar. A credit can sometimes make your bill smaller even when you did not have tax withheld.