An evaluation of the credit worthiness of an individual, firm, government or other organisation. Stronger credit ratings will provide access to lower rates of interest on loans.
Below is a table of some of the countries credit ratings - in terms of the perception of their ability to repay and meet their debt obligations. In this instance Australia has the highest rating according to S&P meaning they are a very safe and secure country to lend too. In contrast to this Puerto Rico have an extremely low credit rating and therefore if they are to secure finance they will have to pay huge interest on top of the principal. This often leads to the trend that countries that need to borrow cannot do so due to their deteriorating credit ratings. These ratings are correct as of October 2015.
Credit ratings are usually undertaken by specialist credit ratings agencies and are considered by financial organisations in the day to day management of assets. S&P, Moody's and Fitch are probably the three most well known credit rating agencies. There is s strong relationship between a sovereign nation's credit rating and the rate of interest that needs to be paid on new borrowings. The best credit ratings (AAA) are able to command the lowest rate of interest on financial markets.