Published By Credit Suite at August 9, 2017
There are 5 business credit scores that entrepreneurs should know about. Keeping your credit scores high is vital, so be sure you don’t miss one of these. It pays to know the answer than just asking where business credit is reported.
A PAYDEX Score works as Dun & Bradstreet’s dollar-weighted number rating of how your small business has paid its bills within the previous 12 months. D&B bases their score on trade experiences based on various vendors’ reports. The D&B PAYDEX Score covers a range from 1 to 100. Higher scores mean a better payment performance. A 100 means your company has an enviable perfect payment history.
Of the big three credit reporting bureaus, D&B is the only one which focuses solely on business credit. In addition, if your company does business with any companies which do not report to Dun &Bradstreet, your payment history with them will not be a part of your PAYDEX score. Be sure (as with all of these scores), to regularly check your business credit report with Dun and Bradstreet.
Experian’s scoring system is called Intelliscore Plus. Intelliscore also shows its scores on a 1 to 100 scale. This score takes into account over 800 variables. For a smaller business, Experian can show a blended rate taking into account both the business and the business owner. This can clearly demonstrate just how intimately financially connected solo and small business owners often are with their companies.
All Experian data comes from third parties, in an effort to assure greater accuracy. Plus, they work with what they call ‘blended data’. This is in order to better score microbusinesses and brand-new businesses. For a small business just starting which does not have much of a payment history at all (if any), Experian makes an effort to take that into consideration while scoring.
The Equifax Credit Risk Score comes from a model which they use to rank certain risks. Equifax uses these details in its calculations, including the depth of the credit information Experian can get, the length of your small business’s credit history, and your company’s payment delinquency history. Equifax then segments some five separate scorecards together, by using statistical analysis. In order to improve their accuracy, Equifax suggests combining their Credit Risk Score with their proprietary Equifax Bankruptcy Navigator Index. The Bankruptcy Navigator Index is used to help predict the likelihood of your business going bankrupt in the next 24 months. Equifax bases its predictive model on over 270 million separate accounts.
FICO uses its SBSS (Small Business Scoring Service) Score to combine consumer bureau, financial, application, and business bureau data. FICO then validates their SBSS models for transactions such as Line of Credit transactions, Term Loans, and Commercial Card obligations which go up to $1 million. Their idea is to evaluate how your small business pays back all sorts of loans.
The SBA’s tool is based on FICO. Their idea is to speed up their credit decisions for loan approvals. Their tool uses several data sources and over one hundred combinations of business and consumer analytical models. They use a designated cutoff. Their overall statistics on their over $60 billion portfolio demonstrate that businesses with scores at, or above the designated cut-off have very good payment history.
When you know where to check your business credit score, you have a far better chance of getting on top of it, and staying there.