##  [# Credit Quality Definition](/sections/credit-quality-definition) 

 

# Credit Quality Definition

 

 

Learn the definition of credit quality and other ETF terminology from the etf.com glossary.



 

 

 

 

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[By ETF Glossary](/authors/etf-glossary)

 Jan 08, 2024

 Edited by: ETF.com Staff

 

 

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## Learn more about Credit Quality

Credit Quality in the context of ETFs refers to the evaluation and measure of the creditworthiness of fixed-income securities within a fund's portfolio. Credit rating agencies assign grades reflecting the likelihood of a borrower defaulting on debt obligations. ETF investors analyze credit quality to assess the risk associated with a fund's bond holdings. Higher-rated securities generally indicate lower credit risk but may offer lower returns. Understanding credit quality is paramount for investors seeking to construct a fixed-income portfolio aligned with their risk tolerance and income objectives, providing a foundation for informed decision-making in the dynamic landscape of bond markets.

### Related Terms

[Corporate Bond ETF](/etf-education-center/etf-glossary/corporate-bond), [High-Yield Bond ETF](/etf-education-center/etf-glossary/high-yield-bond), [Treasury Bond ETF](/etf-education-center/etf-glossary/treasury-bonds)

 
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 [ ETF Glossary ](/authors/etf-glossary) 

 

 

  ETF Glossary is etf.com’s collection of key terms and definitions related to exchange-traded funds. ETFs are investment funds that are traded on stock…   [View Bio](/authors/etf-glossary)

 



 

 


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