If You're A Small Business, Your Credit Is Being Watched More Closely Than Ever - InformationWeek

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6/15/2009
08:15 PM
Fredric Paul
Fredric Paul
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If You're A Small Business, Your Credit Is Being Watched More Closely Than Ever

Credit-score giant Experian is working hard to figure out which small businesses might have trouble paying their bills -- and that could mean trouble getting credit even before you get into trouble.

Credit-score giant Experian is working hard to figure out which small businesses might have trouble paying their bills -- and that could mean trouble getting credit even before you get into trouble.Experian's Business Information Services today launched three new credit scores designed to predict which accounts could pose future business risks:

  • All financial score - Identifies businesses that are likely to go delinquent on a financial account within the next 12 months
  • Commercial credit card score - Identifies businesses that are likely to go 90 days delinquent on a commercial credit card account at least once as well as an account that will go 60 days delinquent two or more times within the next 12 months
  • Retail credit card score - This score is designed with the same parameters as the Commercial Credit Card Score but is focused specifically on commercial retail card accounts

The company said the new tools are highly accurate: "We developed the new scores utilizing product-specific performance information based on recent economic conditions to optimize predictability. In fact, based on key statistical measurements, the new scores have outperformed other scoring models by as much as 60 percent in performance validations on financial portfolios." That's according to a statement from Allen Anderson, president, Experian's Business Information Services.

The idea is that "portfolio risk scores provide greater insight into financial portfolios, enabling program members to maximize existing account relationships and reduce the costs associated with manual review of marginal accounts."

What that means is if your company triggers an alarm on one of these measurements, you could have credit problems without any human being ever getting involved.

Better pay attention to your bills. Your creditors sure are.

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