How your Business Credit Scores are Calculated

How Your
Business Credit Scores
Are Calculated

(877) 600-2487
info@creditsuite.com
www.creditsuite.com/free-business-loan-consultation

Business Credit Scoring
• It differs from personal credit scoring
• Your business’s credit profile links to its EIN
• 3 main business reporting agencies provide your business credit profile
and score: Dun & Bradstreet, Experian, and Equifax Commercial
• A business credit score is a mathematical model used to depict a
business’s risk of going 90 days late on an account within the next 12
months
• Contrast with consumer scores which depict risk over a 24 month time
frame

• The score depicts how likely the business is to default on
payments, not the business owner, even if the owner is the sole
employee of the business
• The score has nothing to do with how the business owner pays his
or her own bills
• All reporting agencies show multiple business credit scores to
evaluate different forms of risk

• FICO has its own business credit score to assess business risk
• Plus banks have their own internal bank credit score which is used to
determine business loan approval
• These scores are used by credit issuers, lenders, suppliers, vendors and
who typically extend credit to businesses
• There is no Fair Credit Reporting Act for business; creditors and vendors are
under no obligation to tell you which scores they are relying upon

• Anyone can pull your business credit report
• With no applicable Fair Credit Reporting Act, you may never know
who’s looking at your business credit reports
• That can be not just vendors, lenders, and creditors, but also
competitors, clients, and business prospects

Dun & Bradstreet
• Dun & Bradstreet provides two Performance Credit
Scores
• Their Performance Scores reflect a company’s past
performance using only information within the D&B
database
• Their 2 core Performance Scores are:
• PAYDEX
• D&B Rating

• The PAYDEX Score shows how a company has paid its bills over the
last 24 months
• PAYDEX is the most popular business credit score out there
• The D&B Rating shows a company’s net worth range based on
company financial statements, as well as a company’s overall
condition
Dun & Bradstreet

PAYDEX
• It is dollar-weighted – Dun & Bradstreet gives more weight to
higher limit accounts over smaller limit ones
• More weight goes to trade accounts reporting higher amounts of
credit extended, and less weight goes to trade accounts reporting
lower amounts of credit being extended
• Past performance in bill payment is a main driver of this number
(ranging from 1-100)
• The higher the score, the lower the risk

• A 70 score or better is defined as a ‘good’ score; it also reflects
payments are made within 15 days of terms
• An 80 score reflects Prompt Payment
• A score of 50 or lower represent payments being made 30 or more
days past terms
• A business can get a good business PAYDEX credit score by
ensuring payments are made promptly to suppliers and vendors
PAYDEX

Your PAYDEX Score
Broken Down
• 100: Expect payment may come early (30 days sooner than terms)
• 90: Payments comes within early discount period (20 days sooner than terms)
• 80: Payment is prompt
• 70: Payment comes 14 days beyond terms
• 60: Payment comes 21 days beyond terms
• 50: Payment comes 30: days beyond terms
• UN: Unavailable

D&B Rating
Dun & Bradstreet says:
“D&B Rating is a performance score based on
a company’s net worth from its financial
statements as well as an overall credit
assessment using information in D&B’s
database.”

• It shows a company’s net worth range based on company financial
statements, plus a company’s overall financial condition
• If a company’s financial statements are not provided, score is based on
company size, industry, or other related factors
• This performance score is based on a company’s net worth and
overall credit assessment
• The rating is broken into 3 distinct categories
• Category is assigned based on the amount of information available on a
company
D&B Rating

• Category 1- Traditional D&B Rating - reflects net worth or equity based on
company financial statements and payment experiences; also includes the Composite
Credit Appraisal Score, an overall assessment of creditworthiness based on company
payments and financial stability
• Category 2- Expanded Credit Appraisal - If financials are not available, the
company falls into this category, based on the total number of employees for the
business
• Category 3- Alternative Ratings - if neither financials nor company size is available,
the score goes in the third category, based on the amount of information available in
the company’s report
D&B Rating

Dun & Bradstreet
Predictive Scoring
• Predicts a company’s expected performance
over the next year, or 12 month time period
• 3 Predictive scores
• D&B Delinquency Predictor Score
• Financial Stress Score
• Supplier Evaluation Risk Rating

Experian Business
Credit Scoring
• Intelliscore – second-most popular score after
PAYDEX
• Most recent score system is Intelliscore Plus
• Intelliscore Plus takes into account hundreds
of variables to offer a business score between
0-100
• It predicts a business’s risk of going seriously
delinquent, or over 91 days late, or having a
major financial issue such as bankruptcy
within the next 12 months

Intelliscore Plus
• It has over 800 aggregates or factors that affect credit scores
• Experian first reviews business data segments like firmographics, public
records, collections, and trade information, then places each business in 1 of
3 different models
• It offers a Blended/ Owner Model, with both commercial data and the
owner’s consumer information
• Because this score includes consumer data, it is one of the only scores
someone needs your permission to pull
• 76-100 is low risk; 11-75 is medium risk in varying degrees; 1-10 is high risk

Experian Blended Scoring
• When trouble hits a business blended
scores drop an average of 30% over the 4
quarters leading up to the bad event
• But consumer scores of an owner show no
statistically significant decline over the same
period
• The score evaluates personal information
on the owner as it relates to business
performance

Experian Intelliscore
Breakdown
• It has 5 different components:
• Historical Behavior 5-10%
• Age, Industry, Size 5-10%
• Credit Utilization 10-15%
• Derogatory items 10-15%
• Payments, Balances 50-60%

Intelliscore
• The score’s basis includes:
• Number of trade experiences
• Outstanding balances
• Payment habits
• Credit utilization
• Trends over time
• Public record recency, frequency and dollar amount
• Demographics like years on file, Standard Industrial
Classification codes and business size

Experian Financial
Stability Risk Score
• This score predicts the potential of a business
going bankrupt or defaulting on its obligations
• Scores range from 1-100
• They are broken down into 5 Risk Classes; Class 1
is the lower risk

Equifax Business
Credit Scoring
• Main business credit scoring model is the Credit Risk
Score
• This score was created to predict the probability of a
business customer becoming seriously delinquent (90
days late) in a 12-month period
• Credit scores range from 1-100; a lower score indicates a
higher risk of serious delinquency
• Like PAYDEX, it’s based on payment history

Equifax Credit Risk Score
• 90+: Paid as Agreed
• 80-89: 1-30 days overdue
• 20-39: 91-120 days overdue
• 1-19: 120+ days overdue

Small Business Credit Risk
Score for Suppliers
• The model is designed to help credit grantors improve risk
assessment and reduce delinquency rates while helping improve
profitability
• The score uses unique bank loans, lease information, credit card
data, and supplier, Telco and utility credit history, public records
and firmographic data from their Equifax Commercial database
• Scores range from 101 – 816

Equifax Scores
• Business Failure Score: predicts the likelihood that the business will fail or
file for bankruptcy within the next 12-month period. This model helps
identify businesses posing a greater risk for failure so suppliers and credit
grantors can take appropriate actions
• Credit Risk Score: predicts likelihood of a business incurring a 90 days
severe delinquency or charge-off over the next 12 months
• Payment Index: a dollar weighted index of a business’s current and past
payment performance based on all payment experiences in the Equifax
Commercial database

FICO’s Business
Credit Scores
• FICO SBSS Score:
• Measure of a small business’s creditworthiness
• Becoming very popular with lenders
• Widely used by SBA to qualify business loans
• Based on both personal and business credit history,
not just business as main business scores do now

FICO Data Combinations
• Creditors can refine the scoring by weighting different factors
• It is a highly intelligent score as it automatically goes from one business
bureau to another in the order or priority the credit issuer chooses, to
generate a score
• So if a lender prefers PAYDEX as the default, the SBSS pulls that data set
• If there isn’t enough data to generate a score, it then automatically checks
another business score like the Experian Intelliscore, or it can even move on
to the Equifax commercial data

How Your Business Credit
Scores Are Calculated
• All scores look at payment history
• This includes how rapidly and fully a business pays off its
financial obligations
• Many try to predict the chances of a business failing in the near
future
• Credit utilization and public records are also taken into
consideration
• We can help

Contact Us for More Information
877-600-2487
info@creditsuite.com
How Your Business Credit Scores
Are Calculated

How your Business Credit Scores are Calculated

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