Everything You Need to Know About Business Credit Scores … And How to Get the Business Credit You Need.

Some Straight Talk About How to Maintain a Strong Business Credit Score.

What is Business Credit Score?

Business credit is credit under a company’s EIN. It has no association with the owner’s Social Security number. It is separate from personal credit, and therefore a business credit score can differ drastically from your personal credit score.

This is credit in the business’s name and it is based on the business’s ability to pay, not the business owner’s. When done right, it is possible to get some business funding based on a business credit score without a personal guarantee. Also, you, the business owner, aren’t personally liable for the credit the business gets.

However, your personal credit score can still affect your ability to get funding.  In some cases, such as with FICO SBSS, personal credit is even used in the business credit score calculation.  What other information is used to calculate your business credit score?  Is it really possible to get funding without a personal guarantee? It depends on the lender, and the credit reporting agency (CRA) they choose to use. 

D&B Business Credit Scores

Dun & Bradstreet's database includes over 250 million firms spanning the globe
Which includes around 120 million active firms and
About 130 million firms which are out of business but kept for historical reasons.

D&B constantly gathers data and works to improve its analyses to ensure the greatest degree of accuracy possible. To ensure as accurate a report as possible, it quite literally pays to provide D & B with your company's current financial statements.

PAYDEX

The PAYDEX Score is Dun & Bradstreet's main score. It tells the lender how well your business has paid the bills over the past year. D & B bases this score on trade experiences documented by vendors.  It ranges from 1 to 100.  The higher the score, the lower the perceived risk.  In business credit terms, it is the most similar to the personal FICO score.  This is why it is the most popular business credit option among lenders. 

In order to get a PAYDEX score, you need a D-U-N-S Number. This 9-digit number is a unique identifying number that works to establish a business credit file with D & B. A D-U-N-S (Data Universal Number System) works to keep accurate and timely data on over 250 million businesses around the globe. You want your business to be one of them.

From an identification standpoint, it makes a lot of sense. With the use of this identifier, errors can be kept to a minimum. As a result, Dun & Bradstreet will never confuse your business with someone else’s.

Dun & Bradstreet requires that you register your company for free on their site to get a number. There are a few other ways to get a D-U-N-S if your business belongs to a special class.  These include if it is a US government contractor or grantee, your company is Canadian, or you are working as an Apple developer

Registration is fast and simple. Once you have said yes to their Terms and Conditions, you are taken straight to a dashboard where you either ask for a D-U-N-S number or you look up to see if your business is already listed. If it is already on the big list, then you click on your company’s name to make any needed changes. 

How it’s calculated
Dun & Bradstreet’s PAYDEX business credit score has a basis in payment details which are reported to the bureau. Or they may be reported to data-gathering businesses partnering with the agency.

D & B uses this data, as well as a credit score and financial stress score, so as to advise just how much credit a creditor should extend to your business.

To get a PAYDEX number, you have to have a D-U-N-S number, plus the bureau will need to have reports of your payments with four or more vendors. Dun & Bradstreet needs both a D-U-N-S number and four or more reported payment experiences in order to generate a PAYDEX score. If you’re missing any of these elements, then your business will not have a PAYDEX score.

Your business’s PAYDEX score reveals if your payments are typically made on schedule or ahead of schedule. As you might expect, a higher number is better.

It will take 30 days from the reporting of your fourth payment experience for your business to get a PAYDEX score.

6 Different Types of D&B Scores

There isn't just one Dun and Bradstreet business credit report.  They offer six different types of reports. Dun and Bradstreet credit reports are used frequently by lenders to help determine the fundability of a business. That is, whether a business can make money and whether it can pay back a loan or credit.

D&B Delinquency Predictor Score and Classification

This score measures the chance the company will not pay, will be late paying, or will fall into bankruptcy.  The raw score is measured on a scale of 101-670 where 670 is the best possible.  Companies are put into classes numbered from  1 to 5. A business in class one 1 is predicted to have the least delinquency risk with a raw score of 580 to 670.  A class 2, or a raw score of 530-579, is considered to be good.  If a company is in class 5, they have over a 53% instance of delinquency with a raw score of 101-452. 

This chart from D&B lays it out nicely.

Dun and Bradstreet Failure Score

Per D&B, “The D&B Failure Score (formerly the Financial Stress Score) predicts the likelihood that a business will, in the next 12 months, seek legal relief from its creditors or cease business operations without paying all its creditors in full.”  Similar to the Delinquency predictor score, it groups companies into classes.  The chart below from D&B directly explains it well.

As you can see, the best class is class 1, with a raw failure score of 1570-1875.  Again, being a class 2 company, with a raw failure score of 1510-1569, is considered good.  You do not want to be a class 5 company.

D&B Supplier Evaluation Risk Rating

This is a rating that ranks the odds of a company surviving 12 months.  The lowest score is 9 and the highest is 1.  A score of 5 is good. 

Credit Limit Recommendation

The credit limit recommendation shows what D&B has calculated to be a business’s borrowing capacity.  It is a dollar amount recommendation for how much debt a company can handle. Creditors often use it to determine how much credit to extend.

Dun & Bradstreet Credit Rating

This is an estimation of overall business risk on a scale of 4 to 1, with a score of 2 being considered good.  The smaller the number, the better.  It is a combination of letters and numbers. At the high end, a 5A rating indicates a company with a net worth of more than $50 million, while an HH rating at the low end represents a company with a net worth less than $5,000.

Rating Classification

Net Worth (USD)

5A   

$50,000,000 and Over

4A   

$10,000,000 to $49,999,999

3A   

$1,000,000 to $9,999,999

2A

$750,000 to $999,999

1A

$500,000 to $749,999

BA   

$300,000 to $499,999

BB   

$200,000 to $299,999

CB   

$125,000 to $199,999

CC

$75,000 to $124,999

DC

$50,000 to $74,999

DD   

$35,000 to $49,999

EE

$20,000 to $34,999

FF

$10,000 to $19,999

GG

$5,000 to $9,999

HH

Up to $4,999

Here is how the composite part of the D&B credit rating works. First, it represents a company’s overall creditworthiness. It’s based on  payment history, years in business, public records, number of employees and financial information. The scale ranges from 1 to 4.

It looks like this:

Composite Credit 

Appraisal Net Worth (USD)

Condition

1

Low Risk

High Credit

2

Good risk

Good Credit

3

Fair risk

Fair Credit

4

High risk

Limited Credit

5

Not enough data to determine risk 

Not determined

A score of one is the most creditworthy.  If your company has not submitted financial information to Dun & Bradstreet, the highest they can get is a 2. This number is combined with the letter/ number combination above that indicates net worth. This gives an overall view of a company’s size and creditworthiness. 

So, if a company has a rating of 4A3, the 4A part means the company’s net worth is $10,000,000 to $49,999,999, and the 3 indicates that the company is a “fair” credit risk.  

If there isn’t enough data on a business to assign a regular Dun & Bradstreet credit rating, an alternative score known as a credit approval score is assigned. That one is based on the number of employees. Dun & Bradstreet will use any data they have available to calculate this alternative rating. A company can control this to a point by ensuring D&B has all of the information they need

Commercial Credit Score

Along with the PAYDEX score and other reports above, Dun & Bradstreet also issues a commercial credit score in three parts.  Each part predicts how likely the business is to default on bills or become delinquent. This kind of predictive scoring helps a credit determine what might happen with a company in the future based on current data.  

Commercial credit score
Measured on a scale of 101 to 670, the commercial credit score predicts the chance of a company becoming delinquent.  A score of 101 means it is highly likely the company will be late with payments.  A score of around 500 is often seen in a positive light.  
Commercial Credit Percentile and Class
The scale runs from 0 to 100.  It shows the chance of delinquency as well. But it measures this probability against other companies in the Dun & Bradstreet system.  A score of 1 is the highest probability versus other businesses in the system. Most lenders consider a score of 80 or higher to be a good thing.

If your Dun & Bradstreet score doesn’t look great, there are options. To see a sample D&B report, go here. 

How Does D&B Get Their Information?

They use what they call the Dun & Bradstreet Data Cloud. According to them, it is “the world’s most comprehensive business data and analytical insights to power today’s most crucial business needs.”  But, where does the information in the data cloud come from? It’s pulled from a number of sources including public records, payment histories reported by creditors, information from the company itself,  and other data agencies such as LexisNexis and the Small Business Finance Exchange among others. 

Equifax Business Credit Report

Equifax shows 5 distinct business determinations on its business credit reports.

Equifax payment
index
The payment
trend
The business’s credit risk score for financial services
The business credit
risk score for
suppliers
The business failure
score

Equifax Payment Index

Like PAYDEX, Equifax’s payment index is a measurement on a scale of 1 to 100. It shows how many of your small business’s payments were made on time. It uses data from both creditors and vendors. But it’s not meant to anticipate future behavior. That is what the other two scores are for.

Equifax Credit Risk Score for Financial Services

The small business credit risk score for financial services predicts the likelihood of severe delinquency or charge-off over the next 12 months. It is measured on a scale of 101-992. The lower the score, the higher the risk.

Small Business Credit
Risk Score for Suppliers

This score predicts severe delinquency or change-offs on supplier account, or bankruptcy, within 12 months. It ranges from 101 to 816. The higher the number, the better.

Equifax Business Failure Score

Equifax’s business failure score takes a look at the risk of your business shutting down. It runs from 1,000 to 1,600 and bases its scoring on a few different factors. The total balance to total current credit limit is a big one. So is the average utilization in the past three months. Equifax also takes note of the amount of time since the opening of the oldest financial account. So is your small business’s worst payment status on all trades in the last 24 months. After that it considers, proof of any non-financial transactions (like merchant invoices) which are late or are on a charge off for two or more billing cycles.

For the credit risk and the business failure scores, a rating of 0 means bankruptcy.

Equifax Payment Trend

The Payment Trend shows a 12-month payment trend in comparison to the industry norm. It measures the average days beyond terms by the date reported for non-financial accounts only.

This trended data is used to identify businesses more likely to default or declare bankruptcy, and to monitor on-going account activities. It is also used to refine and monitor underwriting and modeling strategies, predict propensity to pay, and identify abnormal spending patterns to reduce fraud and delinquency.

Experian Business Credit Report

Experian gathers the same general data from many of the same sources as Dun & Bradstreet. Their reports are similar. There are a few key differences in sources, calculation, and presentation.

Intelliscore Plus

Experian’s most important score is Intelliscore Plus. It shows a statistics-based credit risk. It is a highly predictive score meant to help users make well-informed credit decisions.

The Intelliscore scores range from 1 to 100, with a higher score indicating a lower risk class.

How Does Experian Business Credit Calculate
the Intelliscore Plus Score?

One of the things Intelliscore is most known for is the identification of key factors. These can show how likely a business is to pay its debt.  Over 800 commercial and owner variables go into calculating Intelliscore Plus. Many of them are from the list of general information all credit agencies look at. But some are more detailed or even unique to Experian.  Here is how they are broken down. 

Payment History
This is your current payment status. It’s how many times accounts have become delinquent. It also shows how many accounts are currently delinquent, and overall trade balance.
Frequency
This one shows how many times your accounts have gone to collections. It also notes the number of liens and judgments you may have against you and your business. It also shows any bankruptcies related to your business or personal accounts.

Frequency also incorporates information about your payment patterns. Were you regularly slow or late with payment? Did you decrease the number of late payments over time? That affects your score. 
Monetary
This specific factor focuses on how you make use of credit. For example, how much of your available credit are you using right now? Do you have a high ratio of late balances when compared with your credit limits?

Of course, if you are a new business owner, a lot of this information will not exist yet. Intelliscore Plus handles this by using a blended model to identify your score. This means your personal credit score becomes part of determining your business's credit score.
Payment History

This is a one-page report that provides a summary of the business and its owner.  Experian has found that a combined business-owner credit scoring model works better than a business or consumer only model.  Blended scores have been found to outperform consumer or business scores alone by 10 – 20%.

Experian Financial Stability Risk Score (FSR)

FSR predicts the potential of a business going bankrupt or not paying its debts. The score identifies the highest risk businesses by using payment and public records. They use many factors to make their predictions, including high use of credit lines, severely late payments, tax liens, judgments, collection accounts, high risk industries, and length of time in business.

How Long Does Data Stay on Your Experian Report?

According to Experian:

"Bankruptcies remain on file for 10 years after the filing date. Judgments for 7 years after the filing date. Tax liens for 7 years after the filing date. Collections remain on file for 6 years and 9 months after the last report date. UCC filings for 5 years after the last filing date. Bank, government and leasing data for 36 months. Trade data for 36 months after the last report date. Credit inquiries for 9 months."

FICO SBSS

The FICO SBSS is the business version of your personal FICO credit score. It is becoming more common for lenders to use this score, rather than the Experian business credit score or even the D&B PAYDEX. It stands for FICO Liquid Credit Small Business Scoring Service.

Unlike your personal FICO, the SBSS reports on a scale of 0 to 300. The higher the score, the better. But most lenders demand a score of at least 160.
How is the FICO SBSS Scored?
This score is vastly different from other business credit scoring models. The SBSS uses your business and personal credit scores. It also uses financial information like business assets and revenue. It aims to give a total global financial picture rolled into one score.

Business owners cannot access their FICO SBSS on their own. There is a proprietary formula for score calculations. FICO does not make that information public. You go into a lender blind about what your FICO SBSS credit score may be. This is unlike with the other credit agencies, where you can get a copy of your credit report and know where you stand.

The reason that the FICO SBSS does not work the same way is that you could have a different score from lender to lender. This is due to how lenders ask for and get your FICO SBSS score.
The FICO SBSS Scoring Process
The process starts when you turn in your application. It will include all the financial documentation required by the lender. Then the lender processes the information and sends it to FICO with a request for your SBSS score. At this point, the lender can ask for certain factors in the score to weigh more than others. For example, a lender can put more weight on your personal credit score or your business credit. They could choose to weigh annual revenue as more important than payment history. It is their choice. As a result, your FICO SBSS score could vary between lenders.

First, FICO gets the request from the lender. FICO then searches business credit information from business CRAs. These include D&B, Experian, and Equifax. If they cannot pull enough scoring information from one, they move onto the next. If there is not enough data from any of them, then it uses personal credit and business financials only.

With the lender's weighting preferences, personal credit, business credit, and business financial data, they calculate the FICO SBSS. This information is specific to that lender.
Payment History

This is a one-page report that provides a summary of the business and its owner.  Experian has found that a combined business-owner credit scoring model works better than a business or consumer only model.  Blended scores have been found to outperform consumer or business scores alone by 10 – 20%.

Experian Financial Stability Risk Score (FSR)

FSR predicts the potential of a business going bankrupt or not paying its debts. The score identifies the highest risk businesses by using payment and public records. They use many factors to make their predictions, including high use of credit lines, severely late payments, tax liens, judgments, collection accounts, high risk industries, and length of time in business.

How Long Does Data Stay on Your Experian Report?

According to Experian:

"Bankruptcies remain on file for 10 years after the filing date. Judgments for 7 years after the filing date. Tax liens for 7 years after the filing date. Collections remain on file for 6 years and 9 months after the last report date. UCC filings for 5 years after the last filing date. Bank, government and leasing data for 36 months. Trade data for 36 months after the last report date. Credit inquiries for 9 months."

Personal Credit Scores

Equifax, FICO, and Experian report on personal credit as well. Dun & Bradstreet does not; the big personal CRA (aside from Experian, Equifax, and FICO) is TransUnion.


The FICO is probably the most commonly used personal credit report, but they all count.  They can each vary, but usually only slightly.

Business Credit Scores

Personal Credit Scores

The biggest difference is that a business credit score is based on the business’s ability to pay, not the owner’s. However, business credit differs from personal credit in a number of other ways as well. Various factors affect your business credit score in ways vastly different from how they affect personal credit. Each of these factors affects business credit and personal credit differently.

Late Payments

Most personal accounts do not report late payments to your personal credit report until they are 30 days or more past due.  In contrast, business credit accounts report to business CRAs when an account is only one day late.

Inquiries

When someone checks your personal credit report, there is a negative impact on your credit score.  Hence, your personal credit score can go down. When a lender checks your business credit score, there is no negative impact.

Access to Business Credit Reports

Under the Fair Credit Reporting Act, your consumer report can only be requested by those with “permissible purpose.” A permissible purpose may include the preparation of subpoenas or court orders, written instructions from the consumer, employment purposes with written authorization from a consumer, insurance underwriting purposes, credit transactions with a consumer, tenant screening, and national security investigations. 

However,  anyone can check your business credit score.  The FCRA does not apply to business credit reports.

Name on the Reporting Account

Your personal credit report has the name of the company holding each account reporting.  Your business credit report only lists the industry of the reporting account, not the company’s name.

How long information stays on your report

Though it varies, most information stays on your personal credit report for the life of the report.  The average life of information on your business credit report is 3 years. Of course, averages can encompass a wide range. 

Amounts reported

Exact amounts are shown on your personal credit report, but business credit reports show rounded amounts.  

Who Reports Payments to the CRAs

With personal credit, everyone reports your accounts and payments, or lack thereof, to the CRAs.  Only about 7% of those who check business credit actually report accounts to the business credit CRAs.

Debt-to-Credit Ratio

The amount of debt you have in relation to the amount of credit available to you makes a real impact on your personal credit score.  If your cards are nearly maxed out, your score goes down.  But with business credit, it doesn’t make any difference.

Regulation

There is much less regulation when it comes to business credit. And there is virtually no regulation when it comes to correcting mistakes on your business credit. 

Monitoring

You can get a free copy of your personal credit report each year.  In addition, there are a number of free credit monitoring services that let you get a peek at your credit score.  These are typically updated at least once a month.  

There is really no way to see your business credit report for free.  Instead, you’ll need to use business credit monitoring services.  They are not free, but if you choose the right one the benefit is well worth the cost. 

At Credit Suite you can Monitor your Business credit scores and reports with D&B, Experian, and Equifax for only $24/ month. Here’s how

How Do I Check My Business Credit Scores?

It is important to know what is happening with your credit. Make certain it is being reported and take care of any mistakes ASAP. Get in the habit of taking a look at credit reports and digging into the specifics, not just the scores.

Currently, at D&B you can monitor at: www.dandb.com/credit-builder. At Experian, you can monitor your account at: sbcr.experian.com/pdp.aspx?pg=Sample&link. And at Equifax, you can monitor your account at: www.equifax.com/equifax-complete/Equifax.  

 In late 2020, D&B monitoring prices range from $149 to $199 per month. Experian monitoring products range from $39.95 to $1495 currently. Prices can change at any time, so check directly with the credit reporting agencies for current pricing.

At Credit Suite you can Monitor your Business credit scores and reports with D&B, Experian, and Equifax for only $24/ month. Find out more now.

Update Your Record With the Credit Reporting Agencies

Update the information if there are errors or the relevant information is incomplete. At D&B, you can do this at: www.dnb.com/duns-number/view-update-company-credit-file.html. For Experian, go here: https://www.experian.com/small-business/business-credit-information. Find out what Equifax says about updating company information here: https://www.equifax.com/personal/help/correct-dispute-information-credit-reports/

Business Credit Monitoring with Credit Suite

We can help you monitor business credit at Experian and D&B for considerably less than it would cost you at the CRAs. See: www.creditsuite.com/monitoring.

Disputes

Errors in your credit report(s) can be fixed. But the CRAs normally want you to dispute in a particular way.

Here are the direct links to accessing your credit reports from each CRA:

Here are the direct dispute links for your personal or company’s reports on each CRA:

FAQs

How can Credit Suite Help Me

We look at your business Fundability(TM) before you apply for any accounts, then we help fix issues, establish a Business Credit Profile and then map a path to the best loans and credit lines for your business. 


You can establish business credit without a personal guarantee or personal credit check making it easy to run your business without using your personal finances or harming your personal credit. 


Our advisors and team are real people that love helping business owners like you. 
Your success is our success.

Is my business credit score affected when a lender checks it?

When someone checks your personal credit report, there is a negative impact on your credit score.  When a lender checks your business credit score, there is generally no negative impact.

Does making a late payment affect my business credit score ?

Yes! Late payments will negatively impact your business credit score. Fortunately, paying your bills on time is one of the easiest ways to turn around a low business credit score.

Most personal accounts do not report late payments to your personal credit report until they are 30 days or more past due.  Business credit accounts report to business CRAs when an account is only one day late.

How Do I File A Dispute with a Credit Reporting Agency?

Disputing credit report inaccuracies generally means you mail a paper letter with duplicates of any evidence of payment with it. These are documents like receipts and cancelled checks. Never send the originals. Always send copies and retain the original copies.

The CRAs are getting better at accepting disputes online, so be sure to check.

Fixing credit report inaccuracies also means you specifically detail any charges you dispute. Make your dispute letter as clear as possible. Be specific about the problems with your report. If disputing by mail, be sure to use certified mail so that you will have proof that you mailed in your dispute.

Where Do the Business CRAs Get Their Data From?

D&B uses their Data Cloud, which includes data from a number of sources.  These sources are also where other business credit CRAs gather their data from.  These sources include LexisNexis, The Small Business Finance Exchange, public records, and company reported data. 

The length of time information stays on your business reports averages three years. Sometimes it is seven years, sometimes a year, with a wide range in between.  Often, information comes off after a certain amount of time.  

Per Experian, bankruptcies stay for 7 to 10 years. It depends on the type of bankruptcy. Chapter 13 bankruptcy rolls off your credit report seven years from the filing date, while Chapter 7 bankruptcy stays for 10 years from the filing date.

You do not have to contact a credit agency, it happens automatically. Just check your report to be sure. 

What is LexisNexis?

LexisNexis is a provider of legal, government, business and high-tech information sources. This data is used to help lenders, credit providers, and others to better understand the risks of loaning money or extending credit so lenders and credit providers can make better decisions. This helps credit providers and lenders spot fraud and avoid collections issues. A typical LexisNexis report on just one individual can run over 100 pages long. 

Check out this video on how LexisNexis works.

LexisNexis uses innovative, proprietary technology. It is to help their customers prevent and get rid of fraud. They help increase efficiency by presenting information in a way that is easier for the average business owner to understand. 

Over the span of their 40 years they have grown substantially. Today they have customers in over 100 countries and across multiple industries.

What is the Small Business Finance Exchange? (SBFE)

The SBFE is a not-for-profit entity that gathers data on small businesses from its members. The data is then used to compile comprehensive credit information. Lenders use this information to make credit decisions.

The Small Business Finance Exchange does not lend money. It also does not create or distribute credit reports. Certified vendors like D&B, Experian, and Equifax distribute the data they receive from the SBFE by creating credit analysis products using the information that the Small Business Finance Exchange provides.

CRAs then report the data to members who request a credit report on a business that is included.

Check out this video on how the SBFE works.

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