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The Creditsafe Model

Understanding how our Credit Scores & Limits are calculated

The Creditsafe Score Model is a highly predictive analysis tool that uses the latest advanced statistical techniques. It combines commercial and other key information, including trade payment information, public information, key financial ratios, industry sector analysis and other performance indicators which provides you with view of your current and future customers.  

payment data potion
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How our Credit Scores are calculated

The Creditsafe score model acts in a way that each one of the 1 to 100 score directly correlates to a relational level of risk. The high predictive power of the model can efficiently distribute the ‘bad’ companies to low ratings (higher risk); while in contrast, higher ratings are vastly populated by highly creditworthy companies.  

What does the Creditsafe Score predict? 

The Creditsafe Score Model predicts the likelihood of a company failing within the next 12 months.

Credit Score Bandings

The Creditsafe score bandings is an easy-to-use segmentation tool which allows you to asses our rating model in 5 simple segments. The connection between the likelihood of becoming insolvent (fail) and the 5 score bands is matched to real-world statistics, allowing thus for a really meaningful classification of credit risk. This classification of credit risk does not depend on population percentages, but on population percentages of failure. 

rating bands

Factors considered when scoring a company

Examples of characteristics used in the model

Demographics: 

  • Industry  
  • Previous bankruptcy
  • Number of employees
  • Age of the company        
  • Legal Filings

Payment data: Describing the late (or not) payment behaviour of a company, when such data has been available

Credit Data
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How our Credit Limits are calculated

What is a credit limit? 

  • The credit limit is our recommendation of the total amount of credit that should be outstanding at one time. 
  • It is estimated using the ‘Risk Weighting’ and key balance sheet figures for companies that file accounts; or using other non-financial information for companies which do not.  

What is a Risk Weighting?

 A formula converts the rating into the risk weighting, which is later used for the calculation of the credit limit. As companies with higher ratings represent lower risk, they will be given a higher risk weighting, and vice versa. The extent of credit is thus related to the level of risk.  

credit limit
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Want more detail on how our scores are calculated?

We have a staff of experts who love geeking out on this stuff. Schedule some time to talk with one of them today!