Business credit rating data is a part of business information and company data and offers an assessment of a company’s financial solvency and creditworthiness. It provides a score ranging from 0 to 100, and a higher score indicates a better credit rating.
This data helps companies evaluate potential B2B customers (such as small business owners)and business partners based on credit information.
A business credit rating data is a business's credit score derived from several factors such as current outstanding debts, payment history, credit history, and loan payment delinquency. It can also include other relevant information that contributes to assessing the creditworthiness and whether a company is low or high risk to do business with.
A select group of analysts issues credit ratings for most companies. They include Experian, Equifax, Dun & Bradstreet, and FICO, among others. Experian provides business credit scores, while Equifax publishes business credit reports.
Dun & Bradstreet provides credit scores for businesses and PAYDEX credit scores. The PAYDEX score is calculated from the company’s payments to suppliers and vendors over the past year.
The FICO LiquidCredit Small Business Scoring Service delivers an average score based on the information issued by Experian, Equifax, and Dun & Bradstreet. The FICO LiquidCredit is useful to assess risk (risk score) in extending credit to small businesses, and the Small Business Administration uses this score to decide on d small business loans.
Business credit rating is modeled on a combination of structured and unstructured data.
Some vendors may include additional attributes, and you can check if they match your requirements.
The most critical test for business credit rating data is how it measures against the S&P Global Ratings Standalone Credit Profile. Depending on your business objectives of using this data, you can also run additional tests.
Company credit data comes from reputed analysts, and their models are proven. The data gets completely tested and back-tested against the previous year’s pre-scored database. As the market, industry, or specific companies change, the models may or may not get re-calibrated. You need to ensure that the updates in the scoring models get reflected in the vendor data.
Your business credit rating model must be accurate to ensure that the outcome is as complete as possible to fulfill your requirements. For example, consider a new company that does not have sufficient payment or credit history, making it difficult to establish financial stability. The model needs to take into account the personal credit history of the business owner to arrive at an appropriate outcome.
To test the quality of the business credit rating data:
You can also compare the range and attributes different vendors provide. Asking for a small sample of data is a practical approach to assess if it matches your requirements.
Businesses make decisions about investments, loans, extending credit, and risk management, based on the business credit rating data. The financial future of the company depends on its credit rating data.
Using machine learning models, investors, lenders, and others evaluate the creditworthiness of a company. When the creditworthiness is high, companies can easily secure loans because they are indicated to be low risk. While a less than desirable credit score makes companies less attractive for loans or partnerships, it can also help them strategize to become more valuable to investors.
You can use business credit rating data to augment business registry data for assessing credit risk.
Business credit rating data indicates the creditworthiness of companies and is derived from reputed analyst reports. If this data is not current, your analysis results can be unreliable. Timeliness is a common challenge for this data, considering that the financial status of companies can change relatively quickly.
Before finalizing your vendor, you can test multiple vendors with small samples for the reliability and consistency of their data.
You can use this type of data with funding information and industry NAICS classifier data to assess the financial health of companies.
You can find a variety of examples of B2B and company data in the Explorium Data Gallery
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This type of data is commonly used for assessing the financial stability of a company, and to derive a business failure score. The typical use cases include due diligence, KYC, B2B credit risk assessment, and regulatory compliance.
You can also use business credit rating data to enrich other company data and power data-driven strategic decisions.
Various industries use these data points to assess the creditworthiness of companies. Some industries using this data are retail, eCommerce, consumer goods or CPG, banks and financial services, insurance, manufacturing, and hi-tech.
You can evaluate the quality of your vendor with: