Understanding A1 Credit Ratings: A Guide to Financial Strength

The term A-1 or A1 credit is a rating of financial strength of companies and other entities issuing bonds and other forms of debt. The exact meaning of the term varies, but is a general indication of financial strength.

Standard & Poor's

Standard & Poor's uses the term A-1 when rating an insurer's ability to meet debt obligations in the short term. A-1 indicates that the insurer has a strong ability to meet its debt obligations. A-1 is the highest rating that Standard & Poor's issues for short-term debt.

Moody's

Moody's uses the term A1 to indicate the safety of long-term (over one year) credit obligations. Moody's uses the term A to indicate obligations with low credit risk. In addition to the letter grade, Moody's adds a 1, 2, or 3 to the letter with 1 being a higher grade and 3 being a lower grade. An A1 grade is in the upper portion of the medium grades. Moody's rating scale runs from the Aaa (the highest) to C (the lowest).

Using Ratings

Consumers should use the ratings scores from institutions such as Standard & Poor's and Moody's when making investments or purchasing insurance. The ratings can be used to compare different companies to determine which are stronger and less likely to default on their obligations.