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VietnamCredit Rating Definition: What Are the Different Credit Scoring Ranges?

Monday 08, 10 2018
​Before you decide whether to invest into a foreign country, cooperate with a company or even buy a new house, you should consider a report on company that you will cooperate with or investor that is responsible for building your building. A business
VietnamCredit Rating Definition: What Are the Different Credit Scoring Ranges?

Understading the VietnamCredit Rating Score

Before you decide whether to invest into a foreign country, cooperate with a company or even buy a new house, you should consider a report on company that you will cooperate with or investor that is responsible for your building. A business information provider can help you do this by providing independent, objective assessments of the credit worthiness of companies and countries. A credit ratings company helps investors decide how risky it is to invest money in a certain country and/or company.
 
Each company report has an overall total score and credit rating and knowing these number is also important to the reader because the same scores might mean different things. This article will introduce and guide you how to read the report and understand credit score.

How scores are calculated

VietnamCredit rating index divides into three main categories. This pie chart demostrates more about each category.
 
How scores are calculated
 
On the total credit score of company, finance factors accounted for 40% and non-financial factors accounted for the rest.
 
With Management Factors, VietnamCredit chose Organization, Facilities, Management to evaluate with equal proportions (10 point)
 
In fied of Financial Factors, We base our assessment on four key indicators: Liquidity, Activity, Leverage, Profitability also with equal proportions (10 point)
 
Finally with Market Factors, there are three criteria to mark: Position, Trademark, Future Prospect. Each criterion has a maximum score of 10.

 
How scores are calculated_2

Risk Rating Index

An company's credit score evaluated by VietnamCredit is reported as a number, generally ranging from 1 to 100 equal to letter grades ranging from D (Default) to AAA ( Highest). The following is a ranking (from Highest to Lowest) of VietnamCredit Risk Rating Index
 
Risk Rating Index

91-100 ~ AAA:

The company has EXCEPTIONAL STRONG capacity for timely payment of all its financial commitments.

81-90 ~ AA:

The company has VERY STRONG capacity to meet its financial commitments but carries a higher risk than AAA companies.

71-80 ~ A:

The company has STRONG capacity to meet its financial commitments, but has less stability than higher rated companies.

61-70 ~ BBB:

The company has ADEQUATE capacity to meet financial commitments but has less stability than higher rated companies.

51-60 ~ BB:

The company is expected to be VULNERABLE TO ADVERSE changes in circumstances and economic conditions.

41-50 ~ B:

The company’s stability is expected to be IMPAIRED by adverse changes in circumstances and economic conditions.

31-40 ~ CCC:

Below Average The company’s capacity for meeting financial commitments is SOLELY RELIANT UPON favorable conditions.

21-30 ~ CC:

The company manages to operate but posing HIGH default risk.

11-20 ~ C:

The company is posing VERY HIGH default risk.

1-10 ~ D:

The company is DEFAULTED.

Remember:

- The information contained in company report in general is prepared from data and sources believed to be reliable, available and legitimate at the time of release of this report. Therefore, company report is a references for decision makers to better understanding his/ her partner.

- The same scores might mean different things. As you can see from the table, different credit-scoring models may have different ranges and scoring criteria. That means the same credit score could represent something different depending on which criteria you are concerned.

- Do not just read total credit score, read all sections including in the report from financial, non-financial to expert view to get more information about the company.
 
VietnamCredit is the first company in Vietnam to provide information on companies and industries. With its 20-year-long history, VietnamCredit has offered thorough evaluations of businesses, risk management reports and contributed largely on the promotion of international business. Our reports are of great support to clients on making prompt and precise decisions.
 
Categories:
Credit Rating

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