Release Notes

Release Notes provide an overview of the regular updates made to the Credit Methodology. These updates are an essential part of our commitment to continuous improvement.

February 2024 v7.0

Rating Agency Equivalents

Credora has transitioned its existing rating scale to Rating Agency Equivalents (RAE), to provide our borrowers, lenders, and partners with greater clarity when interpreting and comparing the results of our Credit Assessments. All Credora Credit Reports will now contain a RAE and Implied Probability of Default (“Implied PD”).

Credora's core methodologies are not changing. Borrowers still maintain the same score as before. That score now maps to a Rating Agency Equivalent (RAE) versus a Credora-defined rating scale. This means lenders can more easily compare debt Credora rates to traditional debt issuances and credit instruments.

Borrow History - Repayments

The Borrow History - Repayments factor has been removed from the methodology. This decision followed a comprehensive analysis aimed at assessing the degree of differentiation provided by various scoring factors. It was determined that the Borrow History - Repayments factor exhibited limited scoring variation across borrowers. This prompted a decision to remove the factor and reallocate points. The points previously allocated to this factor have been redistributed to Borrow History - Time (60 points) and Lender Network (40 points).

Custody Risk Score

The Custodian and Exchange Risk factors were removed and replaced with the Custody Risk Score. This change aims to assess a borrower's holistic counterparty risk, rather than just its exchange exposures. A risk score is calculated for all Current Assets with the weighted average value being the input for the factor.

Quality of Financials

The weights of three sub-factors within the Quality of Financials category were adjusted. Consequently, both the 'Financial Preparation' and 'Auditor' sub-factors saw a reduction of one point, resulting in a new maximum score of 25 points each. In contrast, the 'Recency' sub-factor's weight was increased by two points, elevating its maximum score to 30 points.

Visible Liquidity

The scoring curve for the Visible Liquidity factor was adjusted to reflect the findings from Credora's study on 'Credit Risk and Asset Visibility.' As a consequence, the lower bound of the scoring curve was increased from 10% to 20%. Simultaneously, at the upper end of the curve, maximum points will now be awarded for 90% visibility, instead of the previous 100%.

An update has been introduced regarding firms that produce publicly audited financials. With this latest release, firms are now eligible to achieve up to 175 points for the Visible Liquidity factor, based exclusively on their audit history. The awarded scores will be adjusted according to the auditor type: audits conducted by Big 4 firms will not be subject to any discount; audits by regional auditors will incur a 15% score discount, and those by local auditors will see a 30% discount.

July 2023 v6.2

Custodian and Exchange Risk Score

As part of the biannual review process, the risk ratings for custodians and exchanges were updated. No significant deviations in scores were produced from the updated analysis.

May 2023 v6.1

DDQ Factors

The Due Diligence Questionnaire, or DDQ factor, is part of ongoing efforts to improve transparency into Borrower risk management policies. Starting May 1, 2023, this factor was reassigned 20 points. These points are deducted from the Entity Due Diligence and Regulated Onboardings factors.

Penalties will not be assessed until June 1, 2023. At that point any Borrower that has not submitted a completed DDQ will lose 50% of the points for this factor. Subsequently, on July 1, 2023 any Borrower who has not completed the DDQ will lose 100% of the factor points.

Level of Detail (Quality of Financials)

The Level of Detail sub-factor was removed. The 28 points that were attributed to this factor are reassigned to Document Type (14 points) and Audit (14 points).

Credited Assets (Visible Liquidity)

The Visible Liquidity factor has been divided into 2 sub-factors: Visible Assets and Credited Assets. Visible Assets refers to the assets that are visible to the Credora platform through API connection. Credited Assets refers to assets that have been submitted to Credora by way of account statements. This refers to approved bank and brokerage statements.