How is the CheckRate Credit Rating Risk Score calculated?
The CheckRate Credit Rating Risk Score calculations are very complex algorithm that takes in to consideration many data sets from the reports, including Financial figures from the P&L (where filed) and Balance sheet, as well as other predictive fields (such as Number of Directors, Location, SIC code, CCJ & Writs, Part of a Group or not and Mortgage Charges etc.)
Who Built the Credit Rating Risk Score Algorithm's?
The different Credit Rating Risk Score Algorythm's was developed by Pan European Industry Rating Score experts who analysed company failures and business default payments over a 36 month period.
The Process!
Using the detailed data analysis, the key Financial data variables and other data field variables both used for predicting failing companies within the next 12 month or the liklihood of a default payment on businesses in the next 12 months, were combined together in complex algorithm to come up with the prediction score (using a relevant weighting of predictiveness for each predictive variable).
Stress Testing for Accuracy!
These variables were then measured against the entire database and stressed test to ensure accuracy and when the model was perfected and highly predictive it was used to calculate the Credit Rating Risk Scores on all UK & Irish Ltd Companies & UK Non Limited Business, that we now use.
Key Data Fields Used
- Company Age
- Company Size (Due to different calculations and predictive weightings used)
- Turnover
- Net Worth
- Cash & Other Liquid Assets
- Profitability
- Networth
- Age of the company accounts and whether they are filed on time
- Key Ratios (Gearing etc)
- Comments from Independent Auditors (Adverse can affect a score)
- Director Numbers
- Director Ages
- Director Titles
- Director’s history and performance (Associated Company scores and failures)
- Group Structure (Ownership and Associated Company Scores & ailures)
- Demographics (Industry, Location etc).
- Mortgage Data (Amounts and Numbers)
- Industry insolvency trends (Regualr Analysis on Industry Failure Trends)
- Number, Value and Regularity of CCJ’s
- Time critical filings (over due for filing accounts at the registry increases risk of failure).
Real-Time Accurate Decisions that move with the times!
CheckRate ensure the accuracy and predictiveness of the Credit Rating Risk Score by consideration the problems that companies are facing during the tough economic times that the double dip recession has offered and is offering. Especially with certain high risk industry sectors. We ensure our scoring model moves with the times by incorporating the latest trends in Company insolvencies.
The Credit Ratings Risk Scores that CheckRate use, have been further processed to reflect these insolvency trends, using the Standard Industry Classification (SIC) codes, and this ensures companies in the worst affected industry have had their scored adjusted accordingly.
How often is the Risk Score calculated?
The CheckRate Credit Rating Risk Score is calculated during an automated process on a daily basis. When any of the fields within the algorithm's change, from daily feeds of Data we get in from all our Data suppliers (Companies House, Irish CRO Office, Registry Trust, High Court & Sheriff Court Data, Gazette's etc.) the Credit Rating Risk Scores are updated on a real time basis.
New Accounts Filed:
After a company has submited its latest set of annual accounts at Companies House, it usually take between 1 week and 3 to be processed, depending on seasonal peak times, then as soon as the accounts are available to the public, the documents are released to the Credit Reference Agencies to be processed and analysed. This usually take a few days and are then added to the database and a new score would be calculated and made available.
