CreditorWatch RiskScore

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What is RiskScore?

The CreditorWatch RiskScore is the most predictive commercial credit risk score and rating system in the market. Utilising sophisticated machine learning technology and multiple subsets of unique data, the CreditorWatch RiskScore is a live score that helps you assess a business’ creditworthiness and predict their likelihood of default in the next 12 months. 

 

With RiskScore, you can make smarter decisions about who you do business with.

 

CreditorWatch has developed RiskScore with five distinct segments, each based on an entity type and calculated by a separate algorithm. This high level of segmentation provides you with the most accurate data no matter what kind of entity you’re performing a credit check on, including sole traders, public companies and trusts.

 

 

Our Data Sources

RiskScore utilises three distinct categories of data. 

  1. Tradeline Behavioural Data

CreditorWatch’s 50,000+ customers deliver over nine million monthly tradelines from small, medium and large businesses. This unique business-to-business transaction data includes both positive and negative repayment behaviour from two sources: corporate ATB uploads and SME payment data from Xero and MYOB. CreditorWatch is the only Australian bureau to gather payment information directly from small businesses and was the first bureau globally to create a one-click integration with Xero and MYOB for our customers. The unique trade payment data gathered through this integration is the most predictive early warning indicator for future defaults and credit risk.

 

  1. Business Demographic Risk Data

CreditorWatch uses machine learning to enrich our business demographic data and make a more comprehensive range of predictors available, including:

  • Geographical risk clusters that capture economic stress associated with business location, including unemployment and commercial rental costs to a postcode level. 
  • Natural language processing is applied to business names in order to classify high-risk business types. This offers a more granular look at industry risk whilst complementing our ANZSIC industry classifications database. 
  • A wide range of additional risk factors that assess the entity maturity (such as its age and the length of time at its current address), type of entity and number of directors are also included in the algorithm.

 

  1. Traditional Credit Risk Drivers

Our model also includes traditional adverse risk information that are proven predictors of future entity failure. CreditorWatch customers are alerted to this data via our 24/7 monitoring feature. Some key predictors include: 

  • Payment defaults, our most predictive piece of adverse information. 
  • Court actions from all reporting courts in Australia. 
  • High-risk ASIC documents (such as strike-off action and director changes). Mercantile enquiries, which indicate potential future court actions. 
  • Insolvency notices. 
  • Credit enquiries, including frequency and ordered by industry and date. 
  • Director behaviour and their previously failed businesses to help identify risk and phoenixing activity.

 

Company credit score information

RiskScore is for all businesses, regardless of size or industry. Generally, company credit score information has not been an affordable option for small and medium-sized businesses to access on a regular basis, until now. 

 

In addition to RiskScore, we offer a suite of affordable account management tools dedicated to helping small businesses and owner operator outfits manage their cash flow more effectively with long-term debtor solutions.

 

Whether you’re performing a company credit check on a public company, sole trader, trust or other type of entity, RiskScore calculates a numerical credit score between 0-850. The higher the score, the lower risk the entity poses to your business.

 

The RiskScore also ranks entities based on their riskiness with one of 14 credit ratings, from A1 to F. These ratings are categorised within eight risk levels from very low to default, so you can clearly determine the business’s creditworthiness just by glancing at a credit report.

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Download the brochure for more detailed information on how RiskScore works.

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