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The Entity could be higher, but anyway the Entity could possibly be Low 2-C, its strength is irrelevant if you think about it. I mean i easily feel the Entity should be on a higher tier than 3-A since there are characters like Master Hand who while may seem Low 2-C, feels weaker than The Entity. Keep in mind The Entity was able to pull Freddy and the dream world into its realm and even managed to tamper with his abilities.
Thinking how the Entity can give Killers their own abilities and nerf Freddy by tampering with his powers, Its possible that The Entity can lower down stats of characters to the point they become helpless.
Thinking how the Entity can give Killers their own abilities and nerf Freddy by tampering with his powers, Its possible that The Entity can lower down stats of characters to the point they become helpless.