Credit Suite Blog

Get current information on getting credit and loans to grow your business

CLICK HERE TO LEARN MORE

It’s Life-Changing: Your Corporate Credit Score Understood

Published By Janet Gershen-Siegel at December 11th, 2018

Is Your Corporate Credit Score Understood – By You? So Many Business Owners Have No Idea – is that Surprising to You?

You need to get your corporate credit score understood! So you are currently in business, and you are working hard to keep on top of your corporate credit scores. Or possibly you aren’t, and have determined now is a good time to start.

Or perhaps your company is somewhat new, and this is the very first time you’re doing this. Irrespective of your conditions, you’ve most likely asked this question at least once – are my credit ratings any good?

Let’s take a look at the three commercial credit reporting agencies and solve this mystery once and for all.

Corporate Credit Score Understood: Exactly how to effortlessly pull and check your business credit reports

Your best bet as a small business owner is to remain on top of your business credit reports from PAYDEX, Equifax, and Experian.

There are three big credit reporting bureaus for small business and you absolutely ought to check all three of them frequently. This is because they use slightly different measurements. Hence moving the needle for one can move the needle for both of the others. Though perhaps not as much.

Do not let your company credit scores slide, as you have to catch any inaccuracies fast as you can. And, you need to spot anything which is pulling your scores down. Then afterwards take remedial action. You can get your reports easily and stay right on top of all three scores by following a few easy steps.

Corporate Credit Score Understood: Your Company’s Experian Commercial Credit Score

Experian’s Credit Score report includes a company credit score plus other data, including account histories, payment trends, and public records. Experian company credit scores run from 1 to 100.

Unlike Dun & Bradstreet’s PAYDEX score and Equifax’s payment index, Experian considers various factors, and not only payment histories.

Experian Scoring Factors

The variables that go into the calculation include:

  • Lines of credit your small business has an application for in the prior nine months
  • New lines of credit you’ve begun in the most recent six months
  • Your company’s years in business
  • Payment history in the prior twelve months

More Experian Scoring Factors

  • Lines of credit in use in the most recent six months
  • Collections amounts in the last seven years
  • Percentage of available credit in use
  • Amount of payments one – 30 days overdue, or 31 days or more overdue
  • Number of non-net-30 lines of credit (that means the payment is due in fewer or more than 30 days).

In most cases, even small businesses which use credit responsibly will get a medium-low risk rating. As you might expect, older businesses will have an easier time getting a low-risk rating.

A terrific Experian score for your company is 76-100.

Get Your Reports from Experian

Experian, another big credit reporting agency, also offers a method for receiving reports sent to you for a charge. As a result you can monitor your Experian small business credit score here and the setup is effortless.

Having said that, if you would rather not get regular reports (and purchase them), then you can order a separate Experian report for your firm on their site.

Likewise, if there are any problems or matters of contention, you can contest any mistakes on your company’s Experian report if you follow the instructions on their website. Learn more about reviewing your Experian report by assessing a sampling Experian company credit report.

Corporate Credit Score Understood: Your Company’s PAYDEX Score

Dun & Bradstreet’s PAYDEX score ranges from 0 to 100. A PAYDEX score has a basis in payment records which is on report to the bureau. Or it is on report to data-gathering companies partnering with the agency.

D & B uses this data, alongside a credit score and financial stress score, in order to recommend the amount of credit a credit issuer should extend to your business.

Getting a PAYDEX Score

In order to get a PAYDEX number, you must file for a DUNS number by using Dun & Bradstreet’s web site. The number is free of charge. Plus the credit reporting agency must have reports of your payments with four or more vendors.

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

PAYDEX Score Details

The scores break down as follows:

  • 80-100: A low risk of late payments
  • 50-79: A medium risk of late payments
  • 49: A high risk of late payments

Business Credit Score

Your business’s credit rating ranges from 1 to 5. 1 is the very best score. This matches your small business with other small businesses with comparable payment histories. The figure shows how frequently those small businesses tend to pay in a timely manner.

This information can really help credit issuers to comprehend your company’s standing.

But it does not really show all of the payment records from your business.

Financial Stress Score

The financial stress score also ranges from 1 to 5. This score matches your company with other small businesses sharing similar financial and business characteristics.

These similarities are in areas such as size or amount of time in business. This score demonstrates how frequently those companies tend to pay on time. As before, 1 is the best score. This rating is a more comprehensive look at the business landscape, versus an analysis of your business’s authentic payment history.

A terrific PAYDEX score for your company is 80-100.

swatch - It’s Life-Changing: Your Corporate Credit Score Understood

Get Your Reports from D&B (PAYDEX)

Dun & Bradstreet’s PAYDEX score of your company can wind up as one of the primary reasons that your business gets credit in any way. D & B offers Credit Signal, which is a method to keep an eye on your credit score by having the reports come directly to you, for a price.

You may find the price is well worth it in order to avoid the inconveniences that can result from letting this score slip. And you will not need to produce and handle the organizing and reminders you might need to stay up to date with if you don’t make use of it.

Alternatives to Credit Signal

Don’t want to use Credit Signal? That’s fine, as you can acquire your PAYDEX report through D & B and, if necessary, you can speak to their Customer Service department (this department exists as a section of Dun & Bradstreet itself).

In addition, in order to review your PAYDEX report, check out what D & B provides, which is a specimen report as well as some higher level guidelines in the best way to read it.

Corporate Credit Score Understood: Your Company’s Equifax Score

Equifax displays three distinct business determinations on its business credit reports. These are the Equifax payment index, your business’s credit risk score, and its business failure score.

Equifax Payment Index

Much like the PAYDEX score, Equifax’s payment index, which has its measurement on a scale of 100, shows how many of your company’s payments were made promptly. These include both records from credit issuers and vendors.

But it’s not meant to forecast future conduct. That is what the other two scores are for.

Equifax Credit Risk Score

Equifax’s credit risk score assesses how likely it is your business will become severely delinquent on payments. Scores run from 101 to 992, and they measure:

  • Available credit limit on revolving credit accounts, e. g. credit cards
  • Your business size
  • Evidence of any non-financial transactions (e. g. vendor invoices) which are late or were on charge off for two or more billing cycles
  • Amount of time since the opening of the earliest financial account

Equifax Business Failure Score

Lastly, Equifax’s business failure score looks at the risk of your company closing. It ranges from 1,000 to 1,600, judging these aspects:

  • Total balance to total current credit limit average utilization in the last three months
  • How much time since the opening of the oldest financial account
  • Your company’s worst payment status on all trades in the last 24 months.
  • Confirmation of any non-financial transactions (e. g. merchant invoices) which are overdue or have been on charge off for two or more billing cycles.

Equifax Scoring Analysis

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

An epic Equifax score for your company is as follows:

  • Payment Index 0-10
  • Credit Risk score 892-992
  • Business Failure score 1400-1600

Get Your Reports from Equifax

Equifax supplies a risk monitoring service which is more convenient as it allows for reports to go straight to you. If you don’t want to pay for continuing reports, you can alternatively request your business’s Equifax report.

In addition, if you need to question your business’s Equifax report, you can do so by following the information on their site.

You can learn to evaluate your Equifax report by looking into a sample of their reports.

Corporate Credit Score Understood: Takeaways

In many instances, it pays to hand over a few bucks in order to make sure you acquire your company credit reports regularly. It’s a lot less troublesome than to have to remember to do this. And you’ll probably peruse these reports more thoroughly, as they come with a price.

Keep on track and make use of the tools that these credit reporting firms supply, and make your life less complex. After all; you’ve already got enough on your plate.

Because of the recent data breach, there are all the more reasons to review your company and individual credit reports, and be vigilant about any problems you detect.

Keep your scores up and good things will happen. Learn more here and get started toward building business credit attached to your company’s EIN and not your SSN. And you’ll make your corporate credit score understood.

Leave a Reply

Your email address will not be published. Required fields are marked *