Equifax’s Business Credit Scores
Equifax’s 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) within a 12-month period
Credit scores range from 1-100, with a lower score indicating a higher risk of serious delinquency.
Similar to the D&B Paydex score, the Credit Risk Score is based on payment history. All that’s required for a good score is to pay business obligations as agreed. The earlier payments are made, the higher the score will be.
Equifax’s Credit Risk Score
Paid as Agreed 90 +
1-30 days overdue 80-89
31-60 days overdue 60-79
61-90 days overdue 40-59
91-120 days overdue 20-39
120+ overdue 1-19
Equifax also provides a business credit score for suppliers known as the Small Business Credit Risk Score for Suppliers. This model is designed to help credit grantors improve their risk assessment and reduce delinquency rates while helping to improve profitability.
The score utilizes unique bank loans, lease information, credit card data, and supplier, Telco and utility credit history, public records and firmographic data from their own Equifax Commercial database. The Small Business Credit Risk Score for Suppliers credit scores range from 101-816.
Experian also offers several other popular scores that are used by suppliers, lenders, vendors, and credit issuers. The Credit Risk Score predicts the likelihood of a business incurring a 90 days severe delinquency or charge-off over the next 12 months.
The Business Failure Score predicts the likelihood of a business failure through either formal or informal bankruptcy over the next 12 months. The Payment Index provides a dollar weighted index of a business’s current and past payment performance based on all payment experiences in the Equifax Commercial database.
Equifax also offers a Business Failure Risk Score with many reports. This Risk Score predicts the likelihood that the business will fail or file for bankruptcy within the next 12-month period. This model helps identify businesses that pose a greater risk for failure so that suppliers and credit grantors can take appropriate actions.
The FICO SBSS score is a measure of you small business’s credit worthiness. This score is becoming very popular with lenders. This score has also become widely used by SBA to qualify business loans
It’s based on BOTH your personal and your business credit history, not just your business as the main business scores do now.
The SBSS was actually launched all the way back in 1993 since SBA started using it to evaluate all 7 (a) loans under $350,000 in 2014, it’s now become even more popular. Scores reflect the likelihood of the applicant paying their bills timely.
Scores range from 0-300. Higher scores mean lower risk, so the higher score you have the better. Personal and business credit history as well as financial data are used for the total score calculation.
As of 2014, all SBA 7(a) loans must go through a business credit score pre-screen. For SBA loans, you won’t be approved with a score below 140 but they typically set the cutoff as high as 160.
Below that, you’ll probably be denied because of being too high a risk. Actually, chances are good the SBA lender won’t even submit your application to SBA if your score doesn’t meet this threshold.
Many factors are taken into account to calculate the FICO SBSS score, some include… the owner or co-owner’s personal credit information, business credit history, age of business, years in business, and financial data including assets.
Other score factors include cash flow, revenue, the last 12 months of paydex scores from D&B, liens, judgments and any other known financial data.
If you have no business credit history andlimited time in business, the highest possible FICO SBSS score you can get is 140 but even to get that high of a score youd have to have pristine personal credit if no business credit is established .
SBSS models are validated for term loans, lines of credit, and commercial cards all the way up to $1 million. This helps credit issuers making evaluations for larger transactions. If you are applying for bank financing of $1 million or below, chances are good that your SBSS score is being evaluated.
SBSS gives small business credit issuers different combinations of data to evaluate the risk of a business. For example, a credit issuer can choose to only evaluate the application data of the principle owner, or they can choose to also include data from one or more of the business bureaus or they can choose to weight one aspect higher than another.
This is a highly intelligent score because it automatically goes from one business bureau to another in whatever order or priority the credit issuer chooses, to generate a score so if a lender prefers the D&B Paydex score as the default, the SBSS pulls that data set.
If there isn’t enough info to generate a score, it then automatically checks another business score such as the Experian Intelliscore, or it can even move on to the Equifax commercial data.