How a company credit score is calculated
The credit score is a number between 1 and 100 that sums up how likely a company is to meet its obligations. The higher the number, the lower the risk. Behind that single number sits a statistical model that weighs together a range of factors from public registers and financial statements.
What is weighted
Among other things, the model looks at payment history, key financial figures, the company's age and industry, and any payment remarks. A newly started company with no track record is assessed more cautiously than a well-established company with stable figures over several years.
- Payment remarks and debt-collection cases
- Liquidity, solidity and profitability
- The company's age and industry risk
- Roles, ownership and links to other companies
Score and rating go hand in hand
The score is translated into a rating from C to AAA, which makes risk easier to communicate. AAA and AA mean very low to low risk, while B and C signal that you should be careful. Most people use the rating in everyday conversation and the score when they want to see the nuances.
Why it changes
A score is perishable. A new financial statement, a new remark or changed roles can move the number from one day to the next. That is why it pays to look at an up-to-date score – not one that is months old – before you make a decision.