Are You Reading Your Business Credit Report Correctly?
It’s very important to know what’s on your business credit report, because similar to your personal credit history, your business credit can affect your ability to get business loans, make purchases, and arrange for leases. Businessmen, bankers, and alternative lenders will review your business credit report as a basis for doing business with you, so it’s crucial that you’re aware of everything which appears on it.
Credit Report Details To Note
The three main business credit reporting agencies are Equifax, Experian, and Dun & Bradstreet, and with slight variations, all three list the same information on your business credit report.
- Company data – standard information like business name, age of your business, address, phone number, as well as important company personnel.
- Payment history – information like payments to suppliers, repayments of loans, equipment leases, and other business payments.
- Legal problems – any legal issues surrounding your company, for instance court judgments against you, liens, lawsuits, and other actions against your company.
- Collection actions and bankruptcy – any overdue accounts which have gone into collection, along with any bankruptcy filings your business has registered.
Your Business Credit Scores
Each of the three main reporting agencies will calculate various scores based on its own criteria, which all appear on your credit report.
- Experian – uses a Credit Ranking Intelliscore from 0 to 100, which considers the number of years you’ve been in business, the number and types of credit you have applied for, how much credit you have available currently, and any late payments or collections.
- Equifax – a Payment Index from 0 to 100 reflects your payment history, a Credit Risk Score from 101 to 992 calculates the likelihood of your business becoming delinquent on payments within the next year, and a Business Failure Score from 1,000 to 1,880 measures the likelihood of your business closing within the next year.
- Dun & Bradstreet – a PAYDEX score between 0 and 100 indicates whether you’re a good or bad credit risk, with 80 or higher being good, and 49 or lower being poor. A Commercial Credit Score from 1 to 5 predicts the likelihood of your company becoming delinquent on payments within the next year, and a Financial Stress Score from 1 to 5 predicts the likelihood of your business failing within the next year. For both of these latter scores, 1 indicates greatest likelihood.