Explaining the Experian Credit Summary
Commercial Delphi Score
The Commercial Delphi score is an analytical tool designed to highlight the strength, performance and ultimately the creditworthiness of each company in a single score. The score ranges from 0 to 100 with the lowest scoring companies carrying the highest risk.
A score of zero denotes that either the company has failed, is no longer in existence (e.g. it is dissolved) or it can no longer apply for credit without reference to an external authority (e.g. a Receiver has been appointed). A score of 1 indicates that there has been a recent Intention to Dissolve or Petition for Winding-up.
A credit rating is typically the average level of credit that might be required by a company, from one of its suppliers, over a 30-day trading period. The credit rating will vary according to the size of the company's Commercial Delphi risk score and size. The maximum credit rating granted is £10 million and the minimum rating, above zero, is £500. The credit rating will vary according to the company's risk score and size.
A credit limit is assigned to accommodate those trading situations where the total exposure level will exceed the financial value of the credit rating. Such events could occur when an above average level of credit is sought or an additional order has been placed before the original one is due for settlement. The credit limit is a scaleable proportion of the credit rating. As a precautionary measure, Experian decreases the differential between the credit limit and the credit rating as the level of risk increases.
The good / bad odds for each company are simply the likely odds of failure over the next twelve months. Therefore, a company with failure odds of 1 to 1 (probability of 1 in 2) is four times more likely to fail in this time period than another company with failure odds of 7 to 1 (probability of 1 in 8). The shorter the odds, therefore, the greater the risk of failure.
Companies are clustered together in bands of risk according to the good / bad odds. The star rating system is designed to highlight the risk band into which each company's score falls. Accordingly 5 stars indicate the very lowest risk while 1 star indicates a high-risk status. Companies with a 'no star rating' are the highest risk of all.
Whenever a company is considered to be a higher than average risk, text will be produced that will explain the risk status.
Every company with a Commercial Delphi score will have concluding text, which will summarise the creditworthiness of the subject thereby putting the score into a risk context.
Commercial Delphi Bands
For ease of use, we have categorised groups of Commercial Delphi scores into risk bands. This allows users to determine at a glance the overall level of risk that a company potentially poses to the credit grantor.
The bands are as follows:
|Commercial Delphi Score||Commercial Delphi Band|
|0||Dissolved or serious adverse information such as a liquidator, receiver or administrator appointment, a resolution to wind up, a winding up order, a meeting of creditors or a voluntary arrangement.|
|1||Recent Winding-up Petition or Intention to Dissolve notice.|
|26-50||Above Average Risk|
|51-80||Below Average Risk|
|91-100||Very Low Risk|