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Business Credit Reports 101

Published By Janet Gershen-Siegel at August 12th, 2017

When most of us think of business credit reports, we probably think of a lot of numbers and painfully large and dull words. We may be wondering: where is business credit reported? And: what affects business credit score?

Not to worry. Here’s what you need to know.

Nothing happens without a DUNS number

Before your company credit can even be calculated, your business needs a DUNS number from Dun & Bradstreet. Fortunately, these are easy to get, and they are free. You do, however, have to do the work, tofile for a DUNS number via Dun & Bradstreet’s website. The number doesn’t just appear without you requesting one first.

Why do you need a DUNS number? It’s to distinguish your business from similar ones. For example – how often have you gone to an unfamiliar city or town and seen a business with the exact or almost exact name of one in your home town? I’m not talking about franchises here. It’s more like, your town has a Dave’s Restaurant and the place you’re visiting has a Davey’s Restaurant.

By getting a DUNS number, D & B puts your company into their enormous database. But they also get the means of quickly and easily differentiating Dave’s from Davey’s. After all, their DUNS numbers are probably not sequential (and even if they are, the database can still tell them apart).

No DUNS number means no credit score at all – and you don’t want that.

The big credit reporting bureaus can have different names for similar things

Your credit scores from Experian, D&B (through what’s called PAYDEX), and Equifax are – assuming there are no errors on the reports – all going to be pretty similar. For example, all three credit reporting bureaus offer a bird’s eye view at your recent payment history. Experian calls that Payment Information at a Glance; PAYDEX calls it Yearly Trend: Payment Summary; and Equifax refers to it as Financial Account Highlights and Details for the most recent 36 months. However, the trends and activities being measured are close (although not exactly the same).

The easiest way to see how the big three look at your credit is to get a hold of sample reports.

Once the sample reports feel familiar, ask for the real thing! Get your company’s real Experian report here.You can get your business’s real PAYDEX report here. And get your Equifax business credit report here.

The credit reporting bureaus care about just about the same things when it comes to figuring your score

Each of the credit reporting bureaus calculates your score based upon various weights given to the following data points:

  • How fast does your business pay its bills? Do you make your payments early or on time, every time? Or are there some late payments?
  • What is your company’s credit utilization percentage? This is just the credit you are using (that is, the total amount you are borrowing), divided by your total available credit. A good rule of thumb is to keep this percentage at 30% or lower.
  • Are there any judgments, liens (such as for taxes), or UCC filings against your company? Has your business ever declared bankruptcy? Have any of your accounts ever gone into collections?
  • How many credit accounts does your business have open? How old are they?
  • How many times has a vendor or a lender made an inquiry into your account?
  • How long has your company been in business? How large is your organization? (D&B in particular is interested in this information).

There now, that wasn’t so bad.

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