Risk Scores Leverage Data on 25M+ Small Businesses, Provide Greater Predictive Power
Recognizing the emerging needs of today’s lenders and trade creditors, Equifax (NYSE: EFX) has developed a new class of business scoring solutions that provide a more complete view of how a company meets its credit obligations during changing economic conditions. This new suite of market-leading risk scores leverages unique data assets from the Small Business Financial Exchange (SBFE), a member owned, not-for-profit corporation which counts among its members virtually all of the nation’s leading small business lenders. With this insight, banks and other businesses can better respond to market dynamics, minimize fraud and make credit risk decisions with greater confidence.
These new scores are the result of extensive collaboration and research conducted during co-innovation sessions with small business lending experts, many of whom are SBFE members. With a track record for continuously monitoring small business credit trends, Equifax is uniquely positioned to understand the impact of economic changes on commercial lenders and trade creditors. Working closely with customers to understand their needs, Equifax Commercial Information Solutions developed business risk scores designed with several key differentiators:
- Automated scoring systems that are built on pre-recession, recession and post-recession data.
- Models that incorporate twice as many data attributes as other industry scores, including large and small business, public and private organization and time series variables.
- A new, minimum scoring criterion to validate the legitimacy of a business and verify application data for potential fraud.
- Scorecards that can be applied automatically based on business size, eliminating the need for multiple systems and scores.
With these enhancements, banks and other companies can realize significant time and costs savings while benefiting from the increased predictability of the scores. The new Equifax business scores are designed to automate credit risk decisions – reducing the need for manual review of individual credit reports and business applications. By using scores that are validated on the latest economic data, lenders and trade creditors can make more informed predictions about the bottom 20 percent of portfolio accounts that will likely go into late-stage delinquency. This ability to quickly identify risky accounts enables businesses to achieve greater lift from a portfolio – which can result in the acquisition of more profitable customers at a lower delinquency rate.
Available now are the Business Delinquency Score™, which predicts the likelihood of severe delinquency on an account and the Business Delinquency Financial Score™, which determines the likelihood of severe delinquency on financial accounts. Both of these new scores are powerful risk assessment tools designed with an option to include both business principal and business credit information. Customers can now also take advantage of Equifax’s next-generation Business Failure Score™, which incorporates many of the same data elements as the delinquency scores – enhancing its ability to predict the likelihood of business failure within the next 12 months. As Equifax introduces its scoring innovations to the market throughout the year, customers will have the option of tapping into additional features such as risk class and business modeling attributes.
“Many customers tell us that access to information solutions that can translate data into improved performance is critical to managing risk and enhancing account profitability. Our new business risk scores underscore Equifax’s continued commitment to equip banks and other businesses with tools that provide capabilities far beyond traditional industry reports and services,” said Dr. Reza Barazesh, senior vice president, Equifax Commercial Information Solutions. “Leveraging new scoring criteria and world-class data assets, our new scoring solutions provide greater predictive power for making better, quicker credit decisions – regardless of economic developments.”
About Equifax (www.equifax.com)
Equifax empowers businesses and consumers with information they can trust. A global leader in information solutions, we leverage one of the largest sources of consumer and commercial data, along with advanced analytics and proprietary technology, to create customized insights that enrich both the performance of businesses and the lives of consumers.
Equifax Commercial Information Solutions is the leading provider of small business intelligence. We provide the information and expertise necessary for companies to best understand and manage their dealings with small business customers, prospects and suppliers. Our best-in-class commercial credit risk data, combined with highly predictive scoring, corporate linkage, and innovative technology, enables companies to make quick, confident credit decisions and minimize potential losses. Leveraging our EFX ID® keying and linkage technology, companies can also gain greater visibility into their supply chain as well as improve the precision of their sales and marketing efforts – from customer acquisition to retention and expansion.
Headquartered in Atlanta, Georgia, Equifax Inc. operates in the U.S. and 15 other countries throughout North America, Latin America and Europe. Equifax is a member of Standard & Poor’s (S&P) 500® Index. Our common stock is traded on the New York Stock Exchange under the symbol EFX.
Small Business Financial Exchange (www.sbfe.org)
The Small Business Financial Exchange (SBFE) is the country’s leading source of small business credit information. Established in 2001, this non-profit association’s database houses information on about 24 million businesses, and enables information exchange among approximately 400 members who provide small business financing.
Through its resources and relationships, SBFE makes possible innovative risk management solutions by providing industry insight and analysis of aggregated small business financial data to its members. SBFE sets the highest standards for data quality, integrity of use, and information security for its database to protect its members and their customers’ information.
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Filed under: Business
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