Getting a business credit report is easy – if you know where to look. Like a personal credit report, the business version considers the most vital details of a business credit file, including:
- Past payment history and collections
- Public filings
- Overall sales numbers
- Ownership and subsidiaries
- Number of employees
- Historical business operational data
- Industry classification
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With this report, banks and lenders can make informed credit decisions by evaluating whether your business can meet its obligations based on past performance. This allows small businesses to secure credit or loans for short-term needs or growth. You’ll also learn about expected repayment terms, interest rates, insurance premiums, and how customers perceive your business.
What is a Business Credit Report?
A business credit report is a comprehensive document that summarizes a company’s credit history and provides an overview of its financial health. Much like a personal credit report, it includes crucial information such as payment history, credit utilization, public records, and other financial data. Business credit reports are essential tools used by lenders, suppliers, and potential business partners to assess the creditworthiness of a company. By evaluating this report, they can determine the level of risk associated with extending credit or entering into a business relationship. Understanding your business credit report can help you manage your financial health and make informed decisions to support your company’s growth.
Why is a Business Credit Score Important?
A business credit score is a critical factor that can significantly impact a company’s financial opportunities. This score reflects your company’s creditworthiness and can influence your ability to obtain credit, loans, and other forms of financing. A strong business credit score can open doors to better interest rates and more favorable terms, making it easier to secure the funding needed for expansion or operational needs. Conversely, a poor business credit score can pose challenges, such as higher interest rates or difficulty in obtaining credit. Beyond financing, your business credit score can also affect your company’s reputation, making it a vital component in attracting investors, partners, and customers. Maintaining a good business credit score is essential for sustaining and growing your business.
Affordable and Reliable Reporting
Several companies offer affordable business credit reports: Free business credit reports can also be accessed through services like Nav and Dun & Bradstreet’s CreditSignal, which provide limited access to credit information at no cost. Regularly checking these reports is crucial, especially before applying for loans.
Dun & Bradstreet
Dun & Bradstreet provides credit reports starting from free to $39 per month. They assign three key scores: the Paydex score (1 to 100) to evaluate payment performance, the delinquency score (101 to 670) to predict late payments, and the failure score (1,001 to 1,875) to assess the risk of business closure within 12 months. Their free service, CreditSignal, lets small business owners check their Paydex score and receive alerts for changes.
Experian
Experian offers four business credit reports, available for one-time or annual purchases. Their CreditScore report includes a business credit score, financial stability risk rating, payment trends, account histories, and a comprehensive business credit history. The credit score (1 to 100) evaluates payment behavior and delinquent accounts, with a higher score indicating lower risk. The financial risk score predicts the likelihood of default or bankruptcy within 12 months. However, Experian does not offer a free report.
Equifax Business Credit Reports
Equifax business credit reports provide multiple scores, including credit risk (101 to 992), failure risk, and a payment index (1 to 100). A higher credit risk score indicates a lower likelihood of business failure or delinquent payments, while the payment index evaluates payment history. The failure risk score predicts the probability of the business closing within 12 months, with a lower score meaning a higher risk. Equifax offers a free report if you apply for a loan or credit card and also allows small business owners to purchase reports on competitors.
Obtaining a business credit report is a simple and proactive step to securing credit. If your business needs additional working capital, these reports can be invaluable.
How Can I Improve My Business Credit Score?
Improving your business credit score involves adopting good credit habits and understanding how credit scores are calculated. Here are some practical steps to enhance your business credit score:
- Check your business credit report: Obtain a copy of your business credit report from major business credit bureaus like Experian, Equifax, or Dun & Bradstreet. Review it carefully for any errors or inaccuracies that could negatively impact your score.
- Make on-time payments: Consistently paying your bills and invoices on time is crucial. Timely payments demonstrate good credit habits and help avoid negative marks on your credit report.
- Keep credit utilization low: Maintain a low credit utilization ratio by avoiding high balances on your credit accounts and keeping your credit limits high. This shows that you are not overly reliant on credit.
- Monitor your credit score: Regularly check your business credit score to track your progress and identify areas for improvement. Staying informed allows you to take proactive steps to maintain or improve your score.
- Build a positive credit history: Establish a positive credit history by opening credit accounts and making regular, timely payments. A solid credit history is a key factor in a strong credit score.
- Avoid negative marks: Steer clear of late payments, collections, and bankruptcies, as these can significantly harm your credit score. Maintaining a clean credit report is essential for a good score.
- Dispute errors: If you find any errors or inaccuracies on your credit report, dispute them promptly. Ensuring that your credit report is accurate is vital for reflecting your true creditworthiness.
By following these steps, you can improve your business credit score, which in turn enhances your company’s financial health and reputation. A strong business credit score is a valuable asset that can support your business’s growth and success.
