A credit rating involves an assessment of the borrower's creditworthiness, either in general or with regard to a specific debt or financial obligation. The credit rating can be assigned to any entity that wishes to borrow money (individuals, corporations, provincial authorities, sovereign governments or states). Evaluation and credit assessment for companies and governments is generally carried out by credit rating agencies (Standard & Poor's, Fitch and Moody's). For complete details about credit rating in the Czech Republic and for advise in starting a business in the country, you should contact a Czech company registration expert.
Credit rating in the Czech Republic and what it implies
A credit rating generally determines the probability that the borrower is going to pay back a loan (which is essentially a promise), following the confines of the agreement, without failing to pay.
The credit rating generally affects the country's chances of receiving approval for a given loan or getting favorable terms for that particular loan.
The video below offers a short presentation on the credit rating provided to Czech Republic by international credit rating agencies:
Types of credit ratings in the Czech Republic
A credit rating can be high or poor; the high credit rating is an indicator of high possibility for the loan to be paid back in its entirety and the poor credit rating indicates that the borrower has had trouble keeping loan promises in the past and might take the same path in the future. Credit ratings can also be as follows:
• short-term, that reflect the likelihood of the borrower failing to pay within the year; this type has lately become the norm;
• long-term, which predict the borrower's likelihood of defaulting whenever in the extended future.
Our Czech company incorporationagents can provide you with further input about Czech Republic credit rating and assist you in setting up a business on the country's territory.
Current ratings for the Czech Republic
For December 2015 the Standard & Poor's rating for Czech Republic is AA- (stable) and Moody's rating stands at A1 (stable).
Fitch has reported a rating of A+ (stable) for this month. The Czech credit rating score is 80.43 points.
Rating agencies must have an objective and balanced view of the country's financial situation and its ability to repay the debt, even though the country is always striving to have a high credit rating. Credit ratings also determine the interest rate at which the given loan will have to be repaid. Since starting companies in the Czech Republic depends on loans, a denied capital can bring problems to the future firm and it is much more difficult to pay back a high interest rate.
Starting a company in the Czech Republic can be difficult since it involves such complex procedures. The team from CzechCompanyIncorporation.com is very qualified and benefits from extensive expertise in this area.
Mihai Cuc, Partner of
Enescu&Cuc; Law Firm www.romanianlawoffice.com