Creditworthiness score

A credit score is an assessment of a customer's creditworthiness.

There is no official or legally correct framework for a credit score - in practice, it can be expressed in anything from colors and numbers to letters.

With credit rating companies and the Danish central bank, you will often come across ratings such as AAA, AA, A, A-1+ etc. while internal systems typically use a scale from 0 to 10.

We recommend that your company uses as clear a framework as possible.

A credit score is often also referred to as a credit score, but it's the same concept.

What is creditworthiness?

When talking about credit scores, it is key to understand the concept of creditworthiness in general.

Creditworthiness is basically the ability of a person or company to obtain credit or a loan. The answer to whether you are creditworthy is typically either yes or no, but there can also be degrees of creditworthiness.

If you are not creditworthy, you will typically not be granted a loan or credit. However, some lenders still choose to issue loans or provide credit under special conditions such as lower credit limits or shorter terms.

Why use credit scores?

There are many good reasons to use credit scores in lending and credit granting.

Historically, many companies have given credit without sufficient basis - and this still happens today.

Tidligere blev kredit ofte givet på simple kriterier som fx: Er kunden ny? Har kunden positiv egenkapital? Hvilken branche er kunden i?

By adding a credit score to your credit checks, you get a more detailed insight into your customers' financial situation and thus a more secure basis for granting credit.

All forms of credit involve a risk for the lender. The risk, of course, is that the creditor will not get all or part of the money back if the debtor goes bankrupt, dies or becomes insolvent.

How is a credit score calculated?

There is no set formula for how a credit score is calculated.

If the company has an internal credit scoring system, such as banks or professional lenders, the score is often based on internal information such as payment history.

If the company uses an external system for credit ratings, a wide range of information such as public accounting figures, information from debt registers and other relevant data is typically included.

This information is combined into an overall credit score.

Use one system for your credit checks and get a credit score

There are many great systems that can help you assess the creditworthiness of your customers.

At Collectia, we have developed our own solution, Qatchr, which ensures better credit management. With Qatchr you can easily collect credit information, perform credit monitoring, data washing and much more.

Qatchr works for both private and business customers.