While personal credit ratings are important to us as individuals, company and country ratings have become an important part of the investment process to limit risk.

The major credit ratings agencies are now constantly adjusting ratings for the likes of Greece and other European countries to send signals to investors about their financial health.

But what do they mean?

Essentially they are a guide to safety, enabling us to invest with much greater confidence.

Credit ratings come in two categories — Long Term and Short Term. If you're investing for the longer term (three years and beyond) and see a AAA rating, then it means the institution or country concerned have an extremely strong capacity to pay interest and repay principal in a timely manner.

The AA rating means 'a very strong capacity to pay interest and principal in a timely manner' and differs from the highest rating only in a small degree.

An A rating indicates there is strong capacity to pay interest and repay principal in a timely manner, but the institution may be more susceptible to the adverse effects of changes in circumstances and economic conditions than those retail investments with higher ratings. Generally speaking, you're unlikely to see investment products with less than a AAA or AA promoting their credit rating.

When you get down to ratings like BB, B, CCC, CC and C, you're looking at enterprises, investments or countries regarded as having predominantly speculative characteristics with respect to the payment of interest and repay capital.

They're not the beginning and end of investing but they are very useful signposts. Be aware of them and talk about them to your adviser when making investment decisions.