Business Credit Scoring Models

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Corporate Credit Score

Once the business owner understands how important it is to establish and maintain a Corporate Credit Profile, it then becomes important to understand how this profile’s performance is rated and graded by the various reporting agencies. This is important so that the business owner might find ways to improve his corporation’s profile and thereby its credit worthiness and success. Although most of these agencies and organizations follow similar reporting and collecting guidelines, they all have unique, proprietary methodology that need to be considered.

Dun & Bradstreet (D&B™)

D&B™ has a vast database of credit profiles on millions of companies–it is probably the most often referred-to organization when it comes to seeking business or corporate credit ratings. D&B uses a multi-tiered approach to the rating of these businesses that involves a proprietary “Paydex” numerical scoring system for credit worthiness, along with a federal, and international government-recognized “D-U-N-S” system (Data Universal Numbering System) that is a very unique, and efficient, way to categorize a company. The Paydex system combines payment history, and current re-payment capabilities to assign a basic numerical score. In addition to the Paydex score, D&B also utilizes a very simple 1 to 4 credit rating system. Listed below is the Paydex scale:





70Slow to 15

50Slow to 30

40Slow to 60

30Slow to 90

20Slow to 120



Standard & Poors

Standard & Poor’s, also known as “S&P” rates companies on a scale from AAA through D, with an “NR” for companies that are too new or not yet rated. There are ratings beween each letter grade that denotes position among that grade. In addition, many times S&P will also offer an opinion or informed statement known by them as a “credit watch” that denotes whether there is an impending change in the rating. The credit watch may denote a potential upgrade, downgrade, or forecast some uncertainty. Their rating scale is as follows:


AAAThe Best rating – this denotes very stable, reliable companies.

AAA Very Good rating – this denotes reliable companies with a bit more risk than AAA

AGood rating – financial standing can be affected by the economy or market forces.

BBBA Satisfactory rating. – financial standing can be affected by the economy or market forces

BBA Less than Satisfactory rating – financial standing prone to be affected by the economy

BMuch Less than Satisfactory – financial standing very unsteady

CCCVulnerable to financial environment – unsteady

CCHighly Susceptible to financial environment – heavily dependent on favorable economic situation – Speculative prospect

CVery Speculative – May be in a state of arrears on some credit, or even in bankruptcy

CIBehind on interest payments

RIn Bankruptcy and in the hands of Regulatory agency due to financial standing

SDSelectively Defaulted on certain loans or credit

DDefaulted – has defaulted on many obligations and S&P presumes this profile will default on most or all obligations

NRNot Rated




Equifax provides a Small Business Credit Risk Score that intends to predict delinquency on financial accounts, and is designed for the financial services industry. This score is numeric, between 101 and 992, with a lower score denoting a greater risk of delinquency. Along with the numeric code, Equifax delivers up to four “reason codes” that serve to indicate which factors more greatly affected the score. Equifax also utilizes a unique “Commercial Score” system that separates “trade” credit from other credit (leases, etc.), based on the premise that business owners are more likely to meet real estate, lease, or banking lines of credit obligations over trade-related obligations. These scores attempt to predict the type of accounts most likely to be defaulted upon.

Credit Information Score


0-9Lowest Risk

10-20Average Risk

21-30Above Average Risk

31-40High Risk

41-69Highest Risk

70Information has been reported to Equifax from the Bankruptcy Court Office


Credit Information Score is Figured Using the Following Chart:

Years active in Equifax database0-11.1-22.1-44.1-99.1+


Current Payment Index51+41-5131-4021-300-20


Number of payment references in teh last 90 days0-12-34-67-1011+


Last quarter Payment Index vs. same quarter last year (difference in points)41+21+4011+206-100-5


Number of derogatory items in teh past 2 years10+8-95-72-40-1


How recent was the latest derogatory item (in months)1-23-45-67-1212+


Amount of derogatory items as a % of dollars owed to suppliers100%51-99%11-50%1-10%0%



Payment Index

% of Database

065All trade suppliers report payment within terms

1-108Average days to pay is slightly beyond terms

11-206Average days to pay is 10 to 20 days beyond terms

21-305Average days to pay is 20 to 30 days beyond terms

31-406Average days to pay is 30 to 40 days beyond terms

41-905Only 5% of business in Equifax fall into this range

91-1003All trade suppliers report severe past due or default

NANANo tradesuppliers reported to Equifax




ClientChecker bills itself out as the “freelancer’s credit bureau,” and relies on the reports of users of its invoicing software in order to assign a numerical rating to a given business or corporation. This number denotes the creditworthiness of the company being rated, and is known as the PayQuo score. This score accompanies an “Aggregate Business Credit Report” that includes the number of reported non-payments and the average number of late payments in days.

The PayQuo Score is issued according to the following table:


90Paid Early or According to Terms

80Paid 10 or Fewer Days past Terms

70Paid 20 Days or Fewer past Terms

60Paid 30 Days or Fewer past Terms

50Paid 60 Days or Fewer past Terms

40Paid 90 Days or Fewer past Terms

30Paid 120 Days or Fewer past Terms

20Paid 120 or more past Terms, ,or was Written Off


The chart is used to take an average in order to assess a score.



Experian is one of the mega-3 credit bureaus (along with Equifax and Transunion), and also uses specific Corporate Credit Profile ratings in order to grant credit worthiness scores to businesses and corporations. Experian relies on a couple of systems. One is the Intelliscore system that is designed to predict payment delinquencies in excess of 90 days. Used for businesses of any size, the IntelliscoreSMsystem assigns a risk score ranging from 0 to 100, with higher scores denoting less risk.

The other method used by Experian is the Vantage Score system. This system is intended to level the playing field, so to speak, so that differences in rating scores among the different rating agencies are a result of different parameters, and not merely different scores for the same credit issues. These scores were aligned consistently across each credit reporting company to create a score range from 501-990 that correspond to a simple grade-school type (and almost universally understood) A, B, C, D, and F.

The grades range as follows:



801 – 900B

701 – 800C

601 – 700D

501 – 600F


There are, of course, many more credit reporting agencies and organizations, although we have summarized the more popular organizations.



This agency is a sub division of InfoUSA™, and Is geared towards providing a simple, inexpensive, yet informative credit report. It issues a report that contains such things as the names of the officers or managers of a company, their contact information, references, the number of UCC filings, and a simple rating system that is basically an “A through C” chart, with a “U” rating for “unknown.” It gathers much of the information from the business owners themselves, but verifies this information independently.

This is the BusinessCreditUSA Ratings chart:



B+85 – 89








FDInsight offers a unique reporting venue for potential creditors or business partners by offer a menu-like selection of reference or search parameters. Using their unique data gathering system, they can check, bank references, business financial summary, and even public criminal records. Being parented by Factual Data Corp, the second largest reporting company in the mortgage/real-estate field, they wield a powerful research arm that collects and verifies the information supplied.

There are, of course, many more credit reporting agencies and organizations, although we have summarized the more popular organizations.

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