Credit Score – How to generate business intelligence from this indicator?

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Analyze the purchasing and payment behavior of individuals and legal entities, indicating the likelihood of them becoming debtors in the coming months. This is the main function of the Credit Score.

With this strategic information, you can define whether or not to sell on credit to a customer or even offer better payment terms to those with good indicators.

Below, we explain how to use this data to vnpay database your business, reducing default rates and increasing profitability. Enjoy reading!





Score – more accurate and detailed credit analysis


In our previous content, we explained that the Score is the credit rating of individuals and legal entities, which ranges from 0 to 1,000 points. The higher the value, the greater the likelihood of maintaining financial obligations up to date. Click here to learn the main information about this strategic indicator!

But what is the main difference between a credit inquiry that only takes into account restrictive information and one based on the Score? While the former only provides data from the customer's current situation (outstanding debts), the latter analyzes all of the person or company's credit behavior in previous years.





Factors analyzed in defining the Credit Score


The calculation of the Credit Score is based on the principle of risk assessment . In other words, the probability of a customer, whether an individual or legal entity, becoming in default in the next 6 months.

To do this, credit bureaus conduct a thorough analysis of their client's history in the market. Among the aspects analyzed are debts incurred, protests, payments made on time, number of inquiries made by other companies, among others. Based on this data, the risk of the client failing to pay their bills in the future is calculated.

The analyses consider the following groups of information:



REGISTRATION – personal data, addresses, telephone numbers and shares in linked companies;
RESTRICTIVE – debt records, state and national protests, civil actions and bankruptcies ;
CHECKS – alerts for stopped and stolen checks and query history;
MARKET BEHAVIOR – fraud alerts and previous queries;
ANALYTICAL DATA – estimated income, suggested installment amounts, previous credit scores.




But how does this apply to the Brazilian reality?

In a recent survey, Boa Vista Serviços, one of the country's main credit bureaus, found that in 60% of the inquiries made, customers did not have credit restrictions . However, when analyzing the Score of this same group, 47.4% had a high or very high risk of becoming debtors.

The company also observed credit approval and default rates based on inquiries with and without the use of Score. The study, which analyzed the credit offer for a thousand consumers, presented the following results:



The credit approval rate grew by 10.42% with the use of Score;
Meanwhile, the default rate fell by 5.7% ;
The profit of the companies analyzed increased by 13.38% , with a return on investment (ROI) of 150%.








How to use data in credit analysis?


As we can see from the data above, there are three main benefits of the Score: increased approval rates, reduced defaults and increased profitability . Let's detail each one: