John Moody created the Moody’s rating systems in response to investors needing clarity around the components of credit risk. A credit rating is an assessment of the creditworthiness of a borrower in general and is used to determine the interest rate at which the loan will need to be repaid. The higher the credit score, the lower the interest rate. The company ranks the creditworthiness of borrowers using a standardized ratings scale. In Moody’s Investors Service’s ratings system, securities are assigned a rating from Aaa to C, with Aaa being the highest quality and C the lowest quality. When a municipality’s Moody rating is lowered, the local government overpays for financial services and must either raise taxes or reduce services to offset extra money paid to bond investors and financial industry providers.