The act of borrowing is one of the most potent and profound activities undertaken by local government finance. Because it permits local governments to break out of the constraints of their current resources. While the effects on their tax and expenditure structures have been studied, the impact in local government debt has received scant attention This article examines the level of the control on local debt by central government, using the literature review. In fact, local borrowing are heavily controlled by laws and practice. The centralization is one of the most critical cause of the poor use in local debt. We recommend the deregulation of control on local borrowing, and the use of the market function. For these, we propose a credit rating model applicable to floatation in Korea capital market. This model reflects four major areas reconstructed by author when making a credit rating decision : debt, and administrative, economic and financial factors.