How is your TransCredit Score calculated?
How is your TransCredit Score calculated? There are several contributing factors that go into the makeup of the TransCredit Score, but let’s address the 6 most heavily weighted items.
The first three deal with time:
- Length of time in business.
- Our model does credit you with a greater score for every 6 months longevity during the most crucial first 5 years. Length of time your references have done business with you. Again you get a greater score for longevity.
- Days-To-Pay. How long does it take you to pay the carriers freight bill. This is based on credit terms, let’s for a moment consider those terms as net 30. You therefore get bonus credit for less than 30 and begin to be penalized for payment time greater than 30 and yes we include a fudge factor for the US Mail transit time.
The next three are financial:
- Amount of business that you do, the greater the revenues, the better the score. If your company’s annual revenues are $1 million, you must appreciate your competitor who has built his company to $20 million, he will score higher than you as a result.
- Amount of current indebtedness. Higher current debt indicates a greater ability to handle risk. Just like in revenues, if you average $2,000/month with your carriers you will score less than the company that averages $10,000/month.
- Collections or Past Due Amounts. More activity here substantially reduces ones score.