Rate your securities in order to understand their value
Because of the varying degrees of pricing structures that affect the securities market, it is important to have some sort of credit rating system that assesses which securities are performing better than the others.

I am interested in the criteria that are used to assess the credit worthiness of the securities industry and therefore I have come up with a list of factors that might possibly point towards the reasons for the credit rating. This is not an exhaustive list but it explores some of the major issues that will determine how a security is viewed by potential investors.

The list of credit criteria

1. The current state of the security will have an impact on the credit worthiness that is attached to it. For example if you find that the security is having a very sharp fall in its price value then that could be a warning sign that the credit worthiness is in question. On the other hand if you find that the security is experiencing a very sharp rise in its price, you might reasonably conclude that it is because the credit rating of that security has also risen. This is not a cast iron formula because there are blatant exceptions. However it does provide a general direction of where the credit rating is going.



2. The past performance of the securities portfolio will also be considered when making a credit rating decision. For example if over the past twelve month, that particular line of securities has experienced great turbulence in terms of its share value, the credit rating will tumble as well. However if the securities portfolio has been steady throughout a significant period, the chances are that it will be allocated a good credit score. Please note that stability can be subjective and has context attached to it. If the market is generally stable, then it is very easy for a particular security to fall into the category of unstable assets. However if generally the  financial market is uncertain then the threshold for instability will be significantly raised. You have to study the subtle details before you can come to the conclusion about the credit rating of your securities.
3. Related to context is the relative strength of weakness of other securities. Context is very important when you are examining an individual security instrument because speculation plays a crucial part in determining the value of any portfolio in this industry. Thus if other securities seem to be doing well and yours is falling behind, then logic would suggest that its credit rating will not be very high. However if your security is the best among a poor bunch, then its relative credit rating will be high.
4. The methods that are used to assess credit rating for securities have a significant role to play because they bring into play the issues of subjectivity. One credit rating organization may take a dim view of the same set of circumstances that another rating organization would ignore. Sometimes the credit rating in the securities market appears to be a lottery.