A credit rating is an assessment by specialized agencies (like Moody's, S&P, or DBRS Morningstar) of a borrower's ability to repay debt. For municipalities, credit ratings evaluate financial health, debt levels, economic base, governance, and other factors affecting repayment likelihood. Ratings use letter grades (like AAA, AA, A, BBB) with higher ratings indicating lower risk. Credit ratings directly affect borrowing costs—municipalities with strong ratings get lower interest rates, saving significant money over time. Maintaining a good credit rating involves prudent financial management, sustainable debt levels, healthy reserves, and stable governance. Rating changes (upgrades or downgrades) reflect changing assessments of creditworthiness.