Published By Janet Gershen-Siegel at August 28th, 2020
What is Experian Commercial all about? What are details about its most important scores? Check out the details on this major business credit reporting agency. Plus, find out how to improve your business credit scores with Experian. And learn how to monitor your scores for 90% less than it would cost at that business CRA. Understanding and improving your business credit scores is more important than ever in a recession. With Experian, there is a lot you can do to keep your scores high.
So in particular, Experian reports on both business and personal credit. In fact, they blend the two. And this is virtually always what happens with startup ventures. Therefore, by keeping your personal credit scores high, you can directly influence your business credit scores.
So, let’s look at business credit, even in a recession. Business credit is credit which is in a business’s name. So it is not tied to the owner’s creditworthiness. Instead, business credit scores mainly depend on how well a company can pay its bills. Hence, consumer and business credit scores can vary dramatically. So this is true for Experian as well.
Consider the main credit reporting agencies. There are three large business credit reporting agencies. So they are Dun & Bradstreet; Equifax; and Experian. There is also a FICO SBSS business score. But let’s concentrate on Experian Commercial today. Knowledge is power. And at no time is that more important than during a recession.
Experian, like the other business credit reporting bureaus, focuses on providing quality data and analytics. They offer this info to businesses to help them better assess risk. They have a massive consumer and commercial database. So they manage it to help businesses get the best and most up to date info. Experian extracts significant extra value with this data. So they do so by applying their own proprietary analytics and software.
Experian uses both consumer and business credit information to gauge risk.
“By combining personal and commercial credit information in one report, Experian provides a complete picture of the creditworthiness of small businesses”.
Experian PLC has a listing on the London Stock Exchange (EXPN). And it is also in a constituent of the FTSE 100 Index.
Now let’s look at Experian’s Intelliscore Plus business credit score. For Intelliscore Plus, business credit scores range from 0 to 100. So 0 represents a high risk and 100 represents a low risk. The 0 to 100 part is a percentile score. It shows the percentage of businesses scoring higher or lower than the business under review.
Intelliscore Plus is widely used. Many large financial institutions around the world use it. So do more than half of the top 25 property and casualty insurers. And so do most major telecommunications and utility firms. Industry leaders in transportation, manufacturing, and technology also use Intelliscore Plus as their main risk indicating model.
Intelliscore Plus has more than 800 aggregates or factors. These affect business credit scores. There are scores on the millions of businesses in the Experian database. It is a percentile score.
What does Intelliscore Plus measure? It is a highly predictive score. It provides a detailed and accurate reflection of a business’s risk. Intelliscore Plus blends commercial data with the consumer data for the business owner or guarantor.
Check out various Intelliscore Plus analytical approaches. Intelliscore Plus uses three separate analytical approaches to provide risk insights for small businesses.
The first analytical approach is business data including an emerging market model. That one is designed for microbusinesses.
The second analytical approach is a blended one. This model incorporates business and consumer credit information on the owner or guarantor. Experian uses a cascading approach when combining the differing data sources.
So this third analytical approach is a consumer data only model. It is for startups because they have no business history.
For more information on these three analytical approaches, see: experian.com/content/dam/marketing/na/assets/bis/business-information/brochures/intelliscore-plus-v2-product-sheet.pdf
So, which data is in an Intelliscore Plus report? The report contains key information like business address, how long a business has been in Experian’s database, etc. It also has legal filings and collections that may impact business performance. There is a summary of the number of trades, amount of credit extended, etc. And there is a summary of the owner or guarantor’s consumer credit account performance. This includes bank cards, revolving, auto lease, and real estate accounts.
More data includes business credit information like the number of days beyond terms. There’s also the Intelliscore Plus score and the business’s risk class. The report also has owner account information and derogatory information like collections, etc.
For more information on Intelliscore Plus reports, see: bci2experian.com/wp-content/uploads/2017/01/2013-06-Enhanced-Risk-Assessment.pdf
Check out the Experian Financial Stability Risk Score (FSR). The FSR predicts the potential of a business going bankrupt or defaulting on its obligations. The score identifies the highest risk businesses by making use of payment and public records. These records include severely delinquent payments of 61 or more and 91 or more days. They also include high utilization of credit lines; tax liens; judgments; collection accounts; industry risk; and short time in business, etc.
The Financial Stability Risk Score shows a 1 to 100 percentile score, plus a 1 to 5 risk class. The risk class puts businesses into risk categories. So the highest risk is in the lowest 10% of accounts.
For more information on the Financial Stability Risk Score, see: experian.com/content/dam/marketing/na/assets/bis/business-information/brochures/financial-stability-risk-score-ps.pdf
What if you have a score of 66 to 100? And you have a risk class of 1? Then it means there is a low risk of default or bankruptcy. But what if you have a score of 1 – 3? And you have a risk class of 5? Then it means there is a high risk of default or bankruptcy.
So, how long does derogatory data stay in Experian’s database? Trade data stays on your report for 36 months. So does bank, government, and leasing data. Uniform Commercial Code filings stay on your report for 5 years. So note: Uniform Commercial Code filings are in support of loans.
Judgments, collections, and tax liens all stay on your report for 6 years and 9 months. And bankruptcies stay on your report for 9 years and 9 months.
For more information on derogatory data in Experian Commercial reports, see: experian.com/small-business/how-long-credit-report
To improve your credit terms, you should be looking at improving your company’s Experian reports. Also make sure vendors are reporting your payments. The more vendors which report a positive credit history to the credit reporting agencies, the better. Because then the higher your business credit rating will be. And this is not just the case with Experian.
So improving your scores is pretty straightforward. Always pay your bills early or on time and pay them in full. Try to maintain a balance at about 20 to 30% of your limits or less. Do not close positive accounts. And try to avoid derogatory report entries like tax liens.
This advice works just as well for personal credit as for business credit. Because Experian reports on both – and blends them – doing the same good things for both types of credit is helpful. Because it will help you even more.
To improve your Experian business credit scores, you should be looking into Experian business credit monitoring. Experian offers monitoring services. So these prices were current as of June 2020. Business Credit Advantage costs $189 per year. You can monitor business credit for one year. And you’ll get alerts of changes.
Business Credit Score Pro costs $249 per month. So it gives you access to multiple business credit reports. And Profile Plus costs $49.95 for a single report. So a Credit Score Report costs $39.95. With that one, you will get a credit summary report with a score. Or you can monitor your business credit with us for 90% less—and we throw in Dun & Bradstreet and Equifax business credit monitoring.
So Experian gathers diverse data to attempt to understand risk. And Experian works to predict a business’s chance of going delinquent on payments or bankrupt. They combine business and personal credit info for business owners or guarantors. This provides a more detailed picture of risk.
But derogatory data will stay on your Experian business credit reports for years. You can improve your Experian Commercial report by acting to better manage your finances.
And as you improve your personal credit scores with Experian, that will directly affect your business credit scores. Responsible financial stewardship is not just a good idea; it will likely save you money! So with better scores come better rates. Plus, you will have more choices. You will not have to settle for the one and only loan or credit card you can get.
Monitoring your business credit reports with Experian will also help you improve your reports. We offer competitively priced monitoring of your Experian business credit reports.