US credit rating: what it is and why it matters

Credit rating agency Moody's downgraded the US last month

Three capital letter A's with US dollar texture, representing AAA or Triple A Credit rating
The US credit rating has been downgraded by one notch, 'from Aaa, the highest rating, to Aa1'
(Image credit: MattZ90 / Getty Images)

You hear a lot about the credit scores of individual consumers and how that affects their borrowing power. But what you might not realize is that governments have credit ratings, too.

Similar to those of individuals, government's credit ratings indicate how likely they are to default on their debt — and recently, the rating of the U.S. took a dip. In mid-May, the credit rating agency Moody's Ratings downgraded the U.S. credit rating by one notch, "from Aaa, the highest rating, to Aa1," said NerdWallet. It was not the first agency to do so, either. "The downgrade from Moody's means that each of the three major credit rating agencies no longer gives the United States its best rating," said The New York Times.

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Becca Stanek, The Week US

Becca Stanek has worked as an editor and writer in the personal finance space since 2017. She previously served as a deputy editor and later a managing editor overseeing investing and savings content at LendingTree and as an editor at the financial startup SmartAsset, where she focused on retirement- and financial-adviser-related content. Before that, Becca was a staff writer at The Week, primarily contributing to Speed Reads.