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OUR ENGINE

As the basic engine for its analyses, European Rating House uses a powerful diagnostic tool. This is the OK-Score Model, which analyses the movements and interdependencies on the level of goods or service flows, data flows and the corresponding money flows in the
financial statements, and enterprise management. On grounds of this model we provide
a credit score
from 1 to 10 (worst).

The credit scores

The scores are compatible with the rating chart of most credit raters as follows:

OK-Class Rating Comment
1 AAA Nearly perfect security. Very large capacity for expansion, also with borrowed capital.
2 AA Excellent security. Large capacity for expansion, also with borrowed capital.
3 A Solid security. Capacity for expansion, also with borrowed capital.
4 BBB Good security. Potential for expansion, also with borrowed capital.
5 BB Normal security. Some potential for expansion, however alert in expansion with borrowed capital.
6 B Moderate security. Improvements desirable. Expansion with borrowed capital is not recommended.
7 CCC Inadequate security. Improvements necessary. Expansion with borrowed capital dissuaded strongly.
8 CC Worrying security. Improvements imperative. Expansion with borrowed capital can be life threatening.
9 C Hazardous security. Substantial improvements needed promptly. Expansion with borrowed capital not possible.
10 D Business failure within 3 years. Immediate action required such as recapitalization, asset stripping, forced sale or turnaround required. The situation can become fatal: default, Chapter 11 or bankruptcy.

Our scope

European Rating House focuses entirely on corporate credit ratings of commercial companies outside the financial sector. The minimum size of the rated entity is an average-size organization with mandatory external audit. European Rating House does not engage in sovereign ratings or structured finance ratings.

Public credit ratings

The European Union only allows public credit ratings to be provided by credit rating agencies registered or accredited by the European Securities and Markets Authority (ESMA). Thus, for the time being European Rating House only provides private credit ratings.

European Rating House and its directors and collaborators perform credit rating activities in accordance with the IOSCO code of conduct for credit rating agencies. Our Code of Conduct, based on the IOSCO code, can be found here.