Experian’s Business Credit Scores Part 1
The second most popular credit score in the business world is the Experian Intelliscore. Experian’s most recent score system is known as Intelliscore Plus, which they boast of as the next level in credit scoring
Intelliscore Plus takes into account hundreds of variables to offer a business score between 0-100, with 100 being the highest.
Intelliscore 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.
The new Intelliscore Plus has over 800 aggregates or factors that affect the credit score. Experian first takes a business and looks at data segments such as firmographics, public records, collections, and trade information, then places each business in one of three different models .
Intelliscore is one of the only business scores that offers a blender score. The Blended/ Owner Model, blends both commercial data and the owner’s consumer information. Because this score blends with consumer data, this is one of the only scores that someone needs your permission to pull.
Study showed that when trouble hit a business blended scores dropped an average of 30% over the four quarters leading up to the “bad” event. Their consumer scores of the owner showed no statistically significant decline over the same period. The score evaluates the personal information on the owner as it relates to business performance
Experian says their research data indicates that 53% of problems for a business revealed their first signs of credit problems on the business credit reports. 46% of problems first showed up on the owner’s personal report. Blended scores outperform consumer or business alone by 10-20%.
Intelliscore Plus, just like FICO, has multiple facets to the entire score makeup. There are 5 different components that makeup the Intelliscore…
Experian’s Intelliscore Breakdown
Historical Behavior 5-10%
Age, Industry, Size 5-10%
Credit Utilization 10-15%
Derogatory items 10-15%
Payments, Balances 50-60%
Scores are based on a number of factors contained in your business credit report, Number of trade experiences, Outstanding balances, Payment habits, Credit utilization, Trends over time, Public record recency, frequency and dollar amount and demographics such as years on file, Standard Industrial Classification codes and business size.
The Intelliscore is “calculated by a statistically derived algorithm, designed to determine risk basead on multiple factors”.
Credit: Number of trade experiences, balances outstanding, payment habits, credit utilization and trends over time. Public Records: Recency, frequency and dollar amounts associated with liens, judgments or bankruptcies. Demographic Information: Years on file, Standard Industrial Classification (SIC) code and business size.
Experian also offers a Financial Stability Risk Score. This score predicts the potential of a business going bankrupt or defaulting on its obligations. FSR scores range from 1-100 and they are broken down into 5 Risk Classes with Class 1 being he lower risk.