Rating agencies, or credit rating agencies assess the creditworthiness of entities by giving them credit ratings. Their main role is to evaluate the ability of borrowers to repay debt based on their analysis of the borrower's financial information. They use letter-based scores to indicate default risk and financial stability, with higher ratings representing lower risk. Agencies like Moody's, S&P, and Fitch play a key role in capital markets by affecting interest rates and helping with securities trading.