Blue Book Members: Blue Book Scores Predict Negative Events
A useful tool in evaluating credit are Blue Book Scores. They are a powerful credit tool for sellers designed to predict the likelihood a negative credit event will occur within a period of time (normally one year). Scores are available via Blue Book Online Services (“BBOS”) for those companies with the L-200 Membership package, or higher. Scores are shown when viewing a company “Listing Summary” and can also be found in Business Reports.
Scores are best used as a supplement and in conjunction with Pay Indicators. Blue Book Scores are not based on subjective information and are derived primarily from pay information using a proprietary statistical credit scoring model. While scores and Pay Indicators each have their own unique characteristics, using both to evaluate the credit risk of a current or potential account is a good business practice.
Defining Blue Book Scores
A Blue Book Score is a number between 500 and 1000, with 1000 being the highest favorable score, assigned to buying companies. Higher scores designate less likelihood of a negative credit event, such as delinquency or default. The lower the score, the greater the likelihood of delinquency or default.
Most of the companies that buy lumber or lumber products, will have a Blue Book Score, provided that all the necessary information is available for a score to be shown.
Some attributes used to compute the score are:
- number of prompt pay responses
- the change in the number of those responses over time, and
- the consistency of the pay information.
Blue Book Scores can greatly aid your business by:
- quickly identifying companies at risk
- helping you make credit decisions
- determining your overall credit portfolio risk
- identifying trends
- helping create new credit guidelines
- saving you time and money
It is important to note that pay experience information may include disputed terms, skipped invoices or other extenuating circumstances. More in-depth information about the pay reports received on a business are provided in a Blue Book Services Business Report.
No matter what Members are looking for, we’re here to help. We’ll be happy to answer any questions you have or set up a webinar for you and your coworkers.
To learn more about this or any other feature of Blue Book Online Services (BBOS), please contact our Customer Service team.