About the Business Credit Scoring Model
This Credit Score Model is used for evaluating the credit score, risk class, and credit limit of new customers with no public financial information. It is the best-configured statistical model that credit professionals can use. It incorporates data from credible sources such as D&B and NACM to evaluate a customer’s corporate credit risk and business credit limit.
Frequently Asked Questions
For new customers, the credit score is calculated with the help of the following steps:
- Aggregate credit data for the new customer from credit agencies and credit groups you trust (like D&B and NACM)
- Apply the credit data in your scoring model to get the respective credit score, risk class, and credit limit.
- Credit Bureaus like D&B, Experian, Equifax, CreditRiskMonitor, CreditSafe
- Trade Credit Groups like NACM
- Public Financials (P&A, Balance Sheet, etc.)
- Alternative sources like Personal guarantees
Additionally, the following variables should be included in your credit scoring model:
- Failure Score (previously known as Financial Stress Score) (D&B)
- Delinquency Score (previously known as Commercial Credit Score) (D&B)
- Paydex (D&B)
- Average DBT (D&B)
- Predictive Scoring (NACM)
- Total Employees (D&B)
- Years in Business (D&B
- The first step is to evaluate the entity level risk based on financial and operational business factors in order to complete the risk categorization. Simplified credit scoring model with various customizable parameters such as D&B, Experian and NACM have the ability to automatically assign credit limits, making sure the accounts with the highest risk are identified.
- The second step is to compare the calculated credit limit with the existing credit limit to predict the accuracy and make corresponding risk and sales decisions.
Automatically Configure Scoring Models Globally with Credit Cloud
Eliminate the efforts required to customize scoring models based on business units manually. Leverage HighRadius Credit Cloud to automatically configure credit score models across geographies or even customer segments. With automated credit scoring and approval workflows, your credit teams can fast-track their credit evaluations.