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Definition: Credit Report (US & Canada)

Credit.net's credit scoring is based on demographic factors of a business. Some of the demographic factors include employee size, years in business, revenue size, and lines of business.  Credit.net also factors in qualitative information such as bankruptcy filings, SEC submissions, and judgment & liens information.  Credit.net scores indicate a firm’s "probable ability to pay", not the likelihood of timely payment (many large firms are slow to pay their accounts in order to maximize their cash flow). 

Credit scores are arrayed on a scale similar to the US academic grading system (i.e. A+ is assigned for scores of 95 or higher, A 90 to 94, B+ 85 to 89, etc).  The lowest letter grade is C (70 to 74).  Firms with a grade below 70 are assigned a grade of U.  Government and nonprofit institutions are assigned a grade of I.

Please note that a credit score does not translate to a specific likelihood of late or non-payment.  We recommend that credit departments map their current client base (and their associated credit histories) to Credit.net to assist in setting credit score screening policies. 

These credit reports are ideal for making judgments concerning low risk and lower dollar transactions.  They are also useful for sales rep quick qualification and business verification processes.  By necessity, credit decisions must be based upon the credit provider’s policies as applied to each unique transaction. You should obtain additional information from bank and trade references, local credit bureaus, or other sources before extending credit.  Credit.net is not a financial advisor and makes no representations or warranties as to the accuracy, timeliness or completeness of the rating codes, and as such will not be responsible for any losses resulting from the user of their information.

What is the Recommended Credit Limit?
The recommended credit limit is a conservative limit that is calculated through a statistical model based on the credit score, sales volume, and number of employees. The limit should be used as a guideline or starting point in conjunction with your current credit procedures. We recommend that businesses use multiple resources – not only Recommended Credit Limits – when making critical credit decisions.

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