Beyond credit scores: A data-driven approach to assessing business risk

What can go wrong with relying on credit scores for business risk assessments?

Plainly speaking, a lot. Imagine a bank approving a loan based on an applicant's credit score, only to discover later that the company was facing financial challenges due to recent market shifts. These are the kinds of risks that a traditional credit score cannot predict.

Business credit scores are updated quarterly or when significant news impacts a company’s creditworthiness—but even then, they only capture a snapshot. Traditional credit scores remain static, offering a limited and incomplete view of a company’s true health.

This narrow perspective frequently leads to missed opportunities and misjudgments.

Organizations require more than just a number to assess business risk accurately. A data-driven approach that incorporates real-time, comprehensive business health insights offers a far clearer, dynamic, and contextual assessment—one that goes beyond outdated credit scores.

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Why businesses require real-time business health insights

Financial institutions, marketplaces, and payment providers typically assess business risk by analyzing factors about a borrower’s creditworthiness. The only problem? This approach has limitations—the primary being timeliness and rigidity. Static indicators like credit scores and historical financial data often fail to capture the dynamic, real-time risks businesses face today.

For instance, consider a fintech platform evaluating a new vendor based on their credit score. While the score may look acceptable, it doesn’t account for recent legal challenges, such as ongoing litigation due to weak anti-money laundering (AML) practices—a major risk factor. These critical aspects are not reflected in the score, leaving the platform exposed to potential risks.

This is where real-time business health insights come in.

With data-driven risk management tools like Markaaz’s customizable risk scoring model, organizations can assess risk more flexibly. By considering company size, sector-specific data, and other dynamic factors, institutions can tailor business risk assessments to fit the specific needs of different industries or business relationships, ensuring better, more informed decisions.

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The Markaaz difference: Dynamic, data-rich business profiles

Markaaz puts the data in data-rich business profiles. We use four primary metrics to assess business health:

1. Bankruptcy history
2. Markaaz Failure Risk Score, a prediction of the likelihood of a business failing within a year
3. Markaaz Credit Risk Score, the risk of the business becoming delinquent
4. Markaaz Global Credit Risk Score, a global data normalization of these metrics

In contrast to traditional credit scores, which offer a static snapshot of company risks, Markaaz data solutions provide alternative business credit scores that take into account a wider range of factors. With real-time or near-real-time updates—including daily legal filings and compliance information, plus access to over 70 business data elements, analyzed and validated from multiple global sources—Markaaz empowers organizations to work with the most current data available. The Markaaz Business Decisioning API takes this comprehensive view even further, enabling organizations to set custom parameters. By applying configurable data rules, institutions can tailor their risk assessments to the specific factors relevant to each partnership or loan application, ensuring the most accurate and contextually relevant business health insights.Consider the results for a fintech company that used the Markaaz Global Business Identity Platform to verify 5,000 business records. By comparing them against the Markaaz Directory of over 542 million businesses, the company received 360-degree compliance, firmographic, and business health insights in real time. It now retrieves accurate data results in just two seconds, streamlining its risk assessment process and improving its approval decisioning.

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Use cases: How a data-driven approach improves business outcomes

‍Accurate business risk assessment is essential for financial institutions, marketplaces, and payment providers striving to make smarter decisions. Real-time lending and onboarding solutions like Markaaz allow institutions to move beyond outdated credit data, ensuring faster, more accurate, and reliable evaluations of business health and legitimacy.

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Lending

‍Traditional lending methods often overlook businesses with strong potential simply because of outdated or low credit scores. By leveraging constantly updated business health insights, Markaaz data solutions help lenders identify businesses that, while appearing risky on paper, demonstrate solid operational health. This data-driven risk management approach reduces default rates by considering real-time factors like compliance and firmographic performance. For example, a small manufacturing company with low credit scores but strong revenue growth and no recent compliance issues might now qualify for funding that would have been denied using static credit scores.

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Onboarding

‍Onboarding new clients doesn’t need to be time-intensive. With Markaaz data solutions, institutions can quickly verify a business’s legitimacy and operational health. For instance, a payment provider using Markaaz data can onboard promising small businesses in record time, leveraging real-time insights into business risk and compliance to remove delays and boost confidence.Not to mention, Markaaz’s robust API and data infrastructure allow for customized onboarding workflows. By integrating real-time firmographic data into existing systems, organizations can fine-tune internal processes and tailor their approach to each client’s specific risk profile. This not only improves operational efficiency but also builds trust during onboarding.

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Partnerships

‍When forming partnerships, institutions need more than just a surface-level understanding of potential collaborators. With Markaaz’s data-driven risk management tools, organizations can assess partners holistically, considering factors like compliance history, financial health, and market reputation. For example, a bank evaluating a new fintech partner can use Markaaz’s real-time data to confirm the partner’s credibility and financial stability for safer, more informed decisions.In a world where partnerships are crucial for growth—particularly for banks and fintechs—real-time data enables organizations to mitigate risks, strengthen collaboration, and confidently engage with trustworthy partners. By providing a contextual, up-to-date view of businesses, Markaaz empowers institutions to drive growth while maintaining control over platform risk.

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Get started with Markaaz data-driven risk management

‍With comprehensive business profiles built from over 65,000 data sources, Markaaz verifies 542 million businesses across 200+ countries. Our platform bridges the data gap by creating accurate, reliable profiles through de-duplicating, cleaning, and analyzing data at scale. These actionable insights allow you to make informed risk decisions with confidence.Don’t wait to refine your risk management strategy. Connect with our team today.