Business Credit Scores – Like Having Thousands of Credit Managers on Your Team

Credit managers have reviewed tens of thousands of credit reports during their career. Years of experience has taught them the factors that are indicators of risk when evaluating customers.

Since you cannot clone great credit managers, companies rely on business credit scores. Credit scores can render a credit decision in seconds. This gives companies the ability to not only process credit applications more quickly, but they can also review ALL of their customers for changes in risk every month.

All of the big business credit bureaus - Experian, Dun & Bradstreet, and Equifax - provide scoring models designed to assess past payment history or predict future events like delinquency or bankruptcy.

Conflicting Business Credit Scores

Did you know that sometimes one business credit score can disagree with another score using the same credit bureau information? It’s not common, but it does happen. The cause is usually due to the scores evaluating different factors for a company. One model may be looking at financial stress while another is looking at credit risk. A company may be given above average risk of failure but a good credit limit recommendation.

Score models are only as good as the data behind them. It’s important to make sure you’re accessing accurate and complete credit information when using business credit scores. Having visibility into multiple data sources helps fill the inevitable gaps in any single credit information provider’s database.
Score Model 1 from Credit Bureau A may say a company is a low risk, while Score Model 2 from Credit Bureau A may indicate a high risk.

Why would this happen? Usually, it’s due to the information in the credit bureau’s database. Score Model 1 may look at one set of data points, often called attributes, while Score Model 2 is focused on a different set of attributes. If the attributes that apply to Score Model 1 are well-populated with accurate information, that model will be more predictive. However, if the attributes used in Score Model 2 are poorly populated or are populated with incorrect data, the score could tell a very different story about the subject company.

Multiple Sources Make More Accurate Business Credit Scores

Business credit scores come in a variety of flavors from many different sources. All of the big business credit bureaus - Experian, Dun & Bradstreet and Equifax - provide complex statistical models designed to predict how a customer is likely to pay you in the future. There are even industry-specific scores for many industries.

Then, there are scores that blend credit information from multiple credit bureaus, such as the Credit Logic Score from Business Credit Reports.

Credit scores, no matter how well built, are largely dependent on the information used. A single source may have only one or two tradelines which may not even render a score. Multiple sources provide more views of a company, giving the score a more complete picture, which makes the score more relevant and predictive. Business credit scores that leverage information from multiple sources perform better than similar scores that use only one source.

Well-designed business credit scores using multiple sources will enable you to approve more good deals and can save millions of dollars in losses and operational costs. Scores that consider multiple information sources are more powerful, relevant and predictive.

Business Credit Scores of Wansun Credit

When analyzing the credit rating of Subject, Wansun Credit has taken overall consideration of the financial and non-financial factors of Subject. The financial factors include funding liquidity, profitability, growth rate, and turnover and so on; the non-financial factors include the scale of company, historical development, employees’ qualities, and affiliated enterprises and so on. The implications of credit ratings of Wansun Credit are as follows:

Credit Rating Credit Risk Credit Advice
CR1 Extremely low Credit transactions can be very loose.
CR2 Low Credit transactions can be relatively loose.
CR3 Lower than average You can conduct transactions under normal credit terms.
CR4 Average You can conduct transactions under normal credit terms on the basis of closely monitoring it.
CR5 Higher than average You should avoid conducting credit transactions with it as much as possible.
CR6 High You should conduct credit transactions with it on the basis of guarantee.
CR7 Very high You should conduct transactions with it only on the basis of cash.
Not Assessed Unknown We cannot give you the advice on the credit rating or the line of credit because its information is insufficient or inappropriate.

When calculating the benchmark line of credit, Wansun Credit supposes that Subject averagely purchases main commodities or services from different suppliers. The main calculation factors include registered capital, net assets, total assets, turnover, profits and level of credit risk and so on, and we have not considered specific transactions between you and Subject. When making credit decisions, you may refer to the following advice, but you need to make appropriate adjustments as per your marketing strategy and credit policies.


Contact Alicia.Liu([email protected]) or [email protected] for free sample of business credit report.
Wordpress page: https://wansuncredit.wordpress.com/