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Understanding Credit Ratings & Limits

What is the Creditsafe Rating?

The Creditsafe Rating is a highly predictive algorithm that measures a business’s ability to pay on-time. Utilizing the latest advanced statistical techniques, it combines key variables such as: trade payment information, public information, industry sector analysis, and other performance indicators

What does the Creditsafe Rating predict?

The Creditsafe Rating predicts the likelihood of a business failure. Our definition of failure is when a company’s payment behavior becomes seriously delinquent (defined as 90+ days beyond terms) within the next 12 months or that the business will go bankrupt.

How was the Creditsafe Rating created?

Created by our in-house analytics division, the Creditsafe Rating is a statistically backed model. Leveraging key data variables, each proven to have an impact when a business fails. These variables include financials, trade payments, demographic, industry, legal filings, group structure, size of business and more.

What does a Creditsafe Rating mean?

The Creditsafe Rating scores businesses from 0 to 100 scale which directly correlates to a relational level of risk. A higher score indicates a lower the risk of default or bankruptcy while a lower score identifies higher risk of default or bankruptcy. To allow quick decision-making, we have color coded our risk bandings by severity in which red indicates high-risk and green indicates low risk.

What is a Credit Limit?

The Creditsafe Credit Limit is a recommendation as to the total amount of credit that should be outstanding at any one time.