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The company looked good on the surface

September 22, 2011 by John Krickus

A credit score is looking to the future . Sometimes I will receive a question about a score, because on the surface the company looks good, but its credit score is in the high risk range.

Often the confusion is caused by current data looking decent, such as having a high percentage of existing trade dollars paid in a current manner. But when we look closely at the account, we will find that the company is paying its high dollar, main trade vendor on time, while letting payments to other suppliers lapse.

Since a score is looking ahead these early delinquent payments are a warning sign of future deterioration. So, even though a company may look okay at first, it’s important to look deeper to understand how it may perform in the future.

Learn more about improving financial results with the predictive power of scores:


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