Shadow rating refers to developing a rating model through qualitative analysis and quantitative analysis, and establishing a highly fitting and stable functional relationship between the average default probability (PD) implied by the rating of the selected authoritative external rating agency and the credit risk factors of the rating subject as far as possible. On the basis of this functional relationship, an effective credit rating system is constructed by calibrating and adjusting model parameters.

Shadow rating principle, since John Moody, an American, published the first bond rating manual named Moody's Railway Investment Analysis in 1909, western developed countries, especially the United States, have been exploring the field of credit rating for one hundred years. Although there are many problems in foreign rating agencies, especially in this financial crisis, their exploration and experience in the field of credit rating in the past 100 years are still worth learning from in China.