What Happens When Two Rating Agencies Disagree?

When two agencies rate the same company differently, nothing is automatically 'resolved' in the sense of one rating overriding the other — both ratings stand independently, and it becomes the company's task to understand and, where useful, explain the source of the divergence to its own stakeholders.

There Is No Formal Reconciliation Process Between Agencies

It is important to understand that rating agencies do not confer with each other or reconcile their views when their ratings on the same company diverge — each agency's rating stands as its own independent, final opinion, published and maintained according to its own process, entirely separate from what any other agency has concluded. There is no regulatory mechanism requiring agencies to explain divergence from each other's views or to adjust their own rating in response to a different rating from another agency.

What the Company Can and Cannot Do

A company cannot request that one agency simply adopt or match another agency's rating, and attempting to leverage a more favourable rating from one agency as pressure on another is generally neither effective nor well-received, since each agency's rating committee operates independently and is not swayed by what a different, separate agency has concluded.

What a company can do, and should do, is engage separately and substantively with each agency on its own specific concerns and methodology — if one agency's rationale identifies a specific weakness the other did not weight as heavily, addressing that specific weakness directly with the agency that flagged it is the productive path forward, rather than treating the more favourable rating from the other agency as somehow superseding it.

How Lenders and Investors Navigate a Disagreement Between Agencies

As discussed in the companion article on this topic, sophisticated lenders and investors generally have their own internal frameworks for handling a split rating — commonly using the more conservative of the two ratings for internal risk-management or regulatory-capital purposes, while still considering both ratings and their respective rationales as part of a fuller picture of the company's credit risk. A company facing a split rating benefits from understanding this in advance, since it means the practical, real-world impact of a split is often closer to being treated conservatively than to simply averaging or picking the more favourable outcome.

When a Disagreement Reflects a Factual Rather Than Judgemental Difference

Occasionally, a divergence between two agencies traces not to a genuine difference in analytical judgement but to one agency working from outdated or incomplete information — for instance, if one agency's review cycle happened to occur before a specific, material positive development that the other agency's more recent review was able to incorporate. In these cases, proactively sharing the more current information with the agency whose assessment predates it, ahead of its next scheduled review, is a legitimate and often effective way to help that rating catch up to reflect current reality, rather than waiting passively for the next annual cycle.

The Company's Own Internal Response

Beyond managing external communication, a genuine, persistent disagreement between two agencies is worth treating as useful internal information in its own right — if one agency consistently views a particular aspect of the business (say, working capital management, or customer concentration) more critically than the other, this is worth the company's own management taking seriously as an area meriting attention, regardless of which specific rating any individual stakeholder happens to be looking at.

Talk to FinMen Advisors — for help preparing for a rating exercise, write to marketing@finmen.in or call +91 77387 14680.

Disclaimer: This article is intended for general informational and educational purposes only and does not constitute financial, credit, investment, or legal advice. Credit ratings are assigned solely by SEBI-registered Credit Rating Agencies (such as CRISIL, ICRA, CARE Ratings, India Ratings, Brickwork, Acuite, and Infomerics) based on their own methodologies, policies, and the information available to them at the time of assessment. FinMen Advisors provides preparatory and advisory support to companies undergoing a rating exercise and does not issue, influence, or guarantee any rating outcome. Readers should exercise independent judgement and consult qualified professionals before making business or financial decisions.