The ultimate goal of portfolio management is to minimize risk and maximize opportunities to grow the business. Organizations that proactively manage portfolio risk are in a better position to take on more risk, with a greater opportunity for return on that investment. But how? One way companies can be proactive and make better risk decisions quickly is through portfolio scoring. Portfolio scoring is an effective way to proactively assess and manage risk, allowing you to make timely decisions and identify new revenue opportunities within your own customer base.

Portfolio scoring in a nutshell

Portfolio scoring provides a structured approach to assessing the level of risk associated with each of your customers or investments. In fact, by assessing risk and gaining greater visibility into your customer base using a scoring-based model, your business will be able to reduce payment delinquencies and write-offs, thereby maximizing revenue opportunities. The score enables account managers to see up-to-date information on their portfolio of credit customers, allowing them to quickly see how well customers repay not only your business, but other creditors as well.

Often, portfolio scoring is handled by a third-party credit agency, like Experian.  The process is relatively simple. The third-party agency takes your customer data (e.g., customer name, address, balance information – total, current, past-due) and filters that information through a scoring tool. The results often include detailed information, such as:

  • Overall portfolio score
  • Days beyond terms (DBT)
  • Median credit
  • Recent high credit
  • Recent inquiries
  • Collections
  • Tax liens or bankruptcies

This information can then be used internally to make data-driven decisions that minimize risk and increase revenue potential.

Benefits of profile scoring

Profile scoring doesn’t simply assign a risk score to an account. It lets you quickly assess your entire portfolio for risk. In addition, portfolio scoring helps you:

  • Save time and money by identifying a problem with an account so you can quickly take action.
  • Identify accounts to target for additional sales.
  • Support compliance with government regulations.
  • Make quicker, more accurate credit decisions by segmenting decision flow with auto-approve or auto-reject decisioning.
  • View trends in your portfolio to drive changes to your credit policy and practices.
  • Free up credit team resources to address other needs.

How Experian’s credit scoring works

Managing a large portfolio can be time-consuming without the right tools. Portfolio Scoring helps you focus your time and effort on the customers who pose a credit risk or those who show potential for additional revenue.

Experian’s Portfolio Scoring technology, powered by its Intelliscore Plus  and Financial Stability Risk Score, assesses and analyzes your customer data and returns a score based on credit, public record, and demographic attributes. But the score doesn’t just tell you about your customer’s financial health. With Corporate Linkage, which is available with all Experian products, including Portfolio Scoring, you get a clear picture of all relationships within a corporate family (e.g., branches, parents, headquarters). These relationships affect your customer’s overall credit risk. Combined with your in-house data, a Portfolio Score can help you make better and faster business decisions.

Need help managing your commercial credit risk? MSCCM financial experts can assist you. Contact us today.