What is a Credit Risk Indicator?

A credit risk indicator is visible within Xero’s Live Contacts and is a predictor of the likelihood of a business or company to record an adverse event on their credit file within the next 12 months.

The credit risk indicator is separated into five bands from Very High risk (Red) to Very Low risk (Dark Green) depending on the information contained on a business’ credit file.

An adverse event on a credit file means something that could negatively impact an organisations ability to repay their debt obligations. Registering a default, going into external administration as well as any court actions are all examples of adverse events.