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Business Credit Report: What It Is, How to Read Each One

Author: Chandra Dhopatkar
Published: 12/02/2023 7:37 a.m. EST
Last Update: 01/05/2024 10:23 a.m. EST
Edited by: Jennifer Bonilla

A Business Credit Report is important for owners seeking to understand and improve their business’s creditworthiness. It allows them to check their credit score, identify any report inaccuracies, and find strategies to enhance their credit profile. 

Businesses utilize credit reports to evaluate the financial stability of potential partners and clients, aiding in informed decisions. These reports also serve as educational tools for understanding business credit principles and management.

This guide explains business credit reporting, focusing on interpreting reports from Dun & Bradstreet, Experian, and Equifax.

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What Is a Business Credit Report?

Your business credit report serves as a financial guide for lenders and partners to assess the risks of collaborating with your company. It provides an overview of a company’s financial past, payment practices, and creditworthiness, separate from an individual’s personal credit history.

Potential creditors, lenders, business insurance companies, and even other businesses considering a joint venture or partnership may review your report to evaluate your company’s financial stability. Maintaining a sound credit report can lead to improved loan terms, reduced interest rates, and augmented credibility, underscoring the need for regular business credit checks.

Credit File Components

Your business credit scores and reports amalgamate several vital elements to depict a holistic view of your business’s financial history. 

Primary elements include:

• Payment history
• Outstanding debts
• Public records
• Industry classification

Timely payments are the backbone of a well-rounded credit report, as they can help prevent financial stress from tarnishing your business credit profile.

Credit bureaus like Equifax offer free business credit reports annually, allowing businesses to:

• Monitor their credit profiles without incurring additional costs
• Stay updated on their credit status
• Implement changes to improve their credit reputation
• Appeal to prospective partners and lenders

This easy access to credit reports enables businesses to uphold a robust credit reputation and make informed financial decisions. This can then help qualify your business for credit lines, like a traditional business loan, SBA small business loan, or business credit cards, without needing a personal guarantee.

The Role of Business Credit Bureaus

Business credit bureaus like Experian, Equifax, and Dun & Bradstreet act as the financial orchestrators operating behind the scenes. They play an important role in the global economy. These organizations collect financial data to create credit reports and scores for businesses, helping you navigate the ever-changing business landscape.

Each bureau offers its unique scoring system, including business credit scores and personal credit scores. For example, Experian’s Intelliscore PlusSM ranges from 1 to 100, based on over 800 variables such as payment history and debt management. A higher score signifies lower risk, making it more appealing to potential lenders and partners.

Dun & Bradstreet’s PAYDEX score measures payment history on a 1-to-100 scale, with higher scores indicating a lower risk of late payment. By understanding these scoring systems, businesses can strive for excellence and maintain a healthy credit report.

Reasons to Monitor Your Business Credit

Maintaining a healthy business credit profile parallels the journey of steering a ship through tumultuous seas. Monitoring your business credit report is crucial to:

• Staying on course
• Ensuring financial health
• Securing favorable loan terms
• Preventing identity theft

Doing so will help you detect inaccuracies, stay aware of changes, and improve financing opportunities while separating personal and business finances.

Monitoring your business’s credit report not only safeguards your company’s financial well-being, but it also serves as a defense mechanism against business identity theft. By keeping an eye on your credit report, you can detect unauthorized inquiries or fraudulent accounts, enabling you to take swift action and protect your business.

Protecting Your Business’s Financial Health

The cornerstone of a financially stable business is an accurate and credible credit report. Regularly reviewing your business credit report allows you to detect inaccuracies, increase creditworthiness, and secure more favorable terms with vendors and suppliers. By maintaining an accurate credit report, you’re not only preserving your business’s reputation but also opening doors to better business opportunities.

Working with vendors and suppliers that report payments to credit bureaus can also significantly impact your good business credit score. Timely payments and responsible debt management signal financial stability and dependability to lenders, suppliers, and potential partners, which can lead to advantageous terms for loans and credit, as well as lower insurance rates.

Preventing Business Identity Theft

Business identity theft is a constant menace, primed to strike unexpectedly. It occurs when an individual unlawfully utilizes your company’s data, such as its name, address, or tax identification number, for their own advantage. This can lead to fraudulent accounts being opened, unauthorized purchases, and other financial fraud committed in your business’s name.

Monitoring your business credit can act as an early warning system, helping you detect and prevent business identity theft by identifying unauthorized credit inquiries or fraudulent accounts. By staying vigilant and proactive, you can protect your business’s financials and its reputation from the damaging effects of identity theft.

Financial Decision-Making

Building and Monitoring Business Credit: Building business credit is essential for small business owners, as it affects various aspects like obtaining small business loans, attracting business partners, and managing personal liability. Business credit information, including UCC filings, public filings, and payment history, helps potential creditors and partners gauge the financial wellness and credibility of a business.

Regular monitoring services can highlight important aspects like delinquency predictor score, moderate risk ratings, and overall credit activity. This proactive approach ensures that any negative information or incorrect details are addressed promptly, enhancing the customer experience and maintaining a positive business reputation.

For businesses with parent companies, it’s crucial to understand the impact of these relationships on credit data. Monitoring services can help in this regard, especially when considering the implications of shared financial responsibilities or linked credit profiles.

Finally, while businesses often use the owner’s social security number for initial credit applications, establishing a separate credit identity is crucial for long-term growth and minimizing personal financial risks.

How to Get a Credit Report for Business

Accessing your business credit report is as straightforward as requesting it from a leading business credit bureau such as Experian, Equifax, or Dun & Bradstreet. Each bureau offers its own credit reports and monitoring services, ensuring you have access to comprehensive information about your company’s financial history and creditworthiness.

By obtaining your business credit report, you gain a valuable tool in maintaining your company’s wellbeing. Regularly check your business credit to:

• Identify inaccuracies
• Monitor changes
• Take the necessary steps to improve your credit score
• Secure better financing options for your business’s future.

Experian Business Credit Reports

Experian provides a panoramic view of your company’s financial landscape with its business credit reports. These reports contain:

• Basic information
• Financial data
• Credit score
• Risk score

They offer insights into your company’s financial stability and creditworthiness. Experian’s reports are available for purchase or through monitoring services like CreditSignal® and CreditBuilder™ Plus, providing flexible options to suit your business’s needs.

By obtaining your Experian business credit report, you can:

• Ensure that your company’s financial story is accurately represented
• Make informed decisions
• Maintain a strong credit report that will attract potential lenders and partners.

Equifax Business Credit Reports

Equifax offers a detailed snapshot of your company’s financial health with its business credit reports. These reports include:

• Public record information
• Credit account outlines
• Payment analysis
• Trends

Equifax also allows businesses to obtain a free credit report annually, making it easier for businesses to monitor their credit profiles without additional costs.

By staying informed about your Equifax business credit report, you’re taking a proactive approach in maintaining your company’s wellbeing. Regularly reviewing your credit report allows you to:

• Identify inaccuracies
• Monitor changes
• Take the necessary steps to improve your credit score
• Secure better financing options for your business’s future.

Dun & Bradstreet Business Credit Reports

Dun & Bradstreet is another trusted source for these reports, providing insights into your company’s financial stability and creditworthiness. You need a DUNS number to access your Dun & Bradstreet credit report. It is a unique identifier used only by Dun & Bradstreet. Once registered, you can access credit reports, including PAYDEX scores, lawsuits, and other scores, with both free and paid monitoring services available.

Armed with your Dun & Bradstreet report, you can:

• Make informed decisions about your company’s financial future
• Regularly monitor your credit report to identify inaccuracies and monitor changes
• Take the necessary steps to improve your credit score
• Secure better financing options for your business’s growth

Improving Your Business Credit Score

Cultivating a robust business credit score is a process that demands steadfast commitment and dedication. By establishing a solid credit foundation, cultivating positive payment habits, and regularly monitoring and updating your credit file, you can pave the way to a brighter financial future for your company.

Whether you’re a seasoned business owner or just starting out, understanding the importance of a strong business credit score is essential for your company’s success. By taking the necessary steps to improve your business credit scores, you can secure better financing options, attract potential partners, and maintain a healthy financial reputation.

Establishing a Solid Credit Foundation

Establishing a firm credit foundation signifies the initial stride in constructing a potent business credit score. To do this, you should:

1. Incorporate your business
2. Apply for an Employer Identification Number (EIN)
3. Open a business bank account
4. Obtain the necessary licenses and permits required for your company to operate

These steps will help establish a separate entity from your personal finances, create a distinct credit profile for your business, and assist in obtaining a business credit card.

By creating a strong credit foundation, you’re setting the stage for a financially stable future. A solid credit foundation allows your company to access better financing options, negotiate favorable terms with vendors and suppliers, and maintain a positive credit reputation.

Cultivating Positive Payment Habits

Fostering positive payment habits for your business is just as important as maintaining consumer credit scores. By paying invoices on time, managing debt responsibly, and working with vendors that report payments to credit bureaus, you can nurture your business credit score, similar to your personal credit score, to grow and flourish your small business.

This includes:

• Dun & Bradstreet business credit scores
• Experian Business credit score
• Equifax Business credit score
• And other business credit scores

Just as a gardener tends to their plants, you must tend to your business credit score by making timely payments and managing debt responsibly. Doing so will signal financial stability and dependability to lenders, suppliers, and potential partners, ultimately leading to advantageous terms for loans and credit, as well as lower insurance rates.

Monitoring and Updating Your Business Credit File

In pursuit of an exceptional business credit score, it is imperative to consistently monitor and update your business credit file. Here are some steps you can take to achieve this:

1. Check your credit report for inaccuracies.
2. Submit correction requests for any errors you find.
3. Dispute inaccurate payment experiences. By following these steps, you can ensure your credit file remains up-to-date and accurate.

By keeping a watchful eye on your business credit file, you’re taking the necessary steps to maintain a healthy credit score. Regularly monitoring and updating your credit file allows you to:

• Identify inaccuracies
• Monitor changes
• Take the necessary steps to improve your credit score
• Secure better financing options for your business’s future.

How Do Business Credit Reporting Agencies Assign Business Credit Scores?

Business credit reporting agencies assign business credit scores using a variety of factors that reflect the creditworthiness of a business. Here are the key elements they typically consider:

1. Payment History: This is a record of how promptly the business pays its bills. Agencies look at payment data from creditors, suppliers, and vendors to assess whether the business pays on time.
2. Credit Utilization Ratio: This measures how much credit the business is using compared to the total amount of credit available to it. A lower ratio generally indicates better financial health and may lead to a higher credit score.
3. Length of Credit History: The duration for which the business has been using credit can impact its score. A longer credit history can provide more data and might lead to a higher score, assuming the history shows responsible credit use.
4. Debt and Debt Service Capabilities: This involves assessing the amount of debt the business carries and its ability to service that debt. High levels of debt or difficulties in making regular debt payments can negatively affect the score.
5. Company Size and Industry Risk: Some agencies consider the size of the business and the industry it operates in. Certain industries might be seen as riskier than others, and larger companies might have different credit risk profiles compared to smaller ones.
6. Public Records: This includes information like bankruptcies, liens, and judgments which can significantly impact a business’s credit score.
7. Financial Performance: Some agencies analyze financial statements to assess a company’s performance. This might include looking at revenues, profits, cash flow, and other financial indicators.
8. Other Factors: This can include the business’s structure, the experience and background of its principal owners, and other relevant information that might provide insight into the business’s financial stability and creditworthiness.

Each reporting agency has its own method and formula for calculating a business credit score, and these scores can differ from one agency to another. Businesses need to monitor their credit reports from different agencies to ensure accuracy and address any discrepancies.

Assessing Other Businesses’ Creditworthiness

Operating in the business sphere necessitates sharp observation and discerning judgment, particularly for evaluating the creditworthiness of other businesses. Whether you’re considering extending credit, forming partnerships, or evaluating financial risk when working with vendors or suppliers, understanding another company’s creditworthiness is essential.

By reviewing these comprehensive reports, you can gain valuable insights into a company’s financial stability and creditworthiness, including credit risk factors such as:

• Scores
• Ratings
• Payment history
• Ownership information
• Legal events

With this information at your fingertips, you’ll be better equipped to make informed decisions and choose the right partners for your business’s success.

FAQ

How do I check and monitor my business credit?

To check your score, visit the websites of Dun & Bradstreet, Equifax, or Experian. Services like Nav and Experian’s Business Credit Advantage SM provide overviews or monitoring options. You can also directly obtain a report from these bureaus.

Can your LLC have a credit score?

Yes, your LLC can develop a credit score, reflecting its financial history and behaviors. Building a strong score involves timely payments to vendors and lenders and separating business from personal finances.

Does an EIN have a credit score?

A score is tied to your Employer Identification Number (EIN), offering insights into your company’s financial standing. These scores are public, helping to maintain personal financial privacy.

What is the difference between a company credit report and a personal credit report?

Corporate credit reports detail a company’s financial dealings and payment practices, while personal reports track individual credit history. Unlike personal credit scores and reports, anyone can access a company’s report and find out what its scores are without the need for permission.

How can I access my company’s credit report?

Access it by requesting from major credit bureaus like Experian, Equifax, or Dun & Bradstreet.

What is a free business credit check and how can it benefit small businesses?

A free business credit check allows small business owners to view their business’s payment history and overall credit data without incurring any cost. This is crucial for building business credit and assessing financial health. Regular checks help in identifying any incorrect information, understanding scores and ratings, and making informed financial decisions.

How does on-time payments affect business credit activity?

On-time payments play a significant role in a business’s credit activity. Consistent and timely payments to creditors and suppliers reflect positively on your business credit report, influencing borrowing power, interest rates on business loans, and the perceptions of potential business partners. This reliability can categorize your business as low risk, which is appealing to many lenders and creditors.