Published By Janet Gershen-Siegel at July 10th, 2018
Learn how to get a business credit report – we can show you how. And we can show you how to read it, too.
Your best bet as a business owner is to stay on top of your business credit reports from PAYDEX, Equifax, and Experian. There are three big CRAs for businesses. And you should evaluate all three of them regularly.
This is because they use slightly different yardsticks. Hence moving the needle for one can move the needle for both of the others. But maybe it’s not as much.
Do not let your business credit scores slide. This is because you must pounce on any mistakes as quickly as you can. Also, determine anything pulling your scores down. And then take remedial action.
So get a business credit report easily. And stay on top of all three scores by following a few easy steps.
Get a business credit report from Dun & Bradstreet Report; it’s generated by database. This report serves to assist clients in making decisions on new credit applications.
The main reason to get a business credit report is for credit risk monitoring of vendors, suppliers, and business partners. This helps companies make informed business credit determinations. And they steer clear of bad debt.
Dun & Bradstreet takes many factors into account in generating such a report.
These include a predictor of payment delinquency; how financially stressed a company is versus similar businesses; an evaluation of supplier risk; credit limit recommendation; D & B rating; and PAYDEX score. Let’s consider all of these factors in turn.
Dun & Bradstreet uses predictive models to ascertain how likely a company is to be behind with its payments. Predictive scoring is a method of using historical data to try to predict future outcomes. It entails identifying the risks inherent in a future decision.
It does this by examining the relationship between historical information and the future event.
This represents an objective and statistically derived counterpart to subjective and intuitive analyses. A business can rank and order accounts per chance of an event occurring. So this includes delinquent payments.
But Predictive Scoring is only a statistical chance, and not a guarantee.
The Financial Stress Percentile compares a company to similar businesses.So they are in the same region and business sector.. They also have the same number of employees, or amount of years in the business.
Financial Stress Score Norms indicate an average score and percentile for all firms with similar demographic characteristics. These Norms can measure where this particular business stands in relation to the norm for its peer group.
Dun & Bradstreet produces Financial Stress Scores to forecast the likelihood of business failure over the upcoming twelve months. D & B defines business failure as follows.
A firm gets legal relief from its creditors; ceases business operations without paying all creditors in full; voluntarily withdrawal from business operations thus leaving unpaid obligations; receivership or reorganization; or some form of arrangement for the benefit of its creditors.
This all has a basis in information in D & B’s commercial database.
The score ranges from 1,001 to 1,875. A score of 1,001 is the highest chance. But a 1,875 is the lowest chance of business failure.
This is a division of the scored universe into five distinct groups. So they run from 1 to 5. A 1 is businesses with the lowest chance. But a 5 is firms with the highest chance of failure.
This Class makes it so a customer can quickly segment their new and existing accounts into various risk segments.
This is to determine appropriate marketing or credit policies. For any businesses Discontinued at This Location; Higher Risk; or Open Bankruptcy, those records automatically get a 0.
A Financial Stress Score Percentile is shown as a 1-100 ranking. So a 1 is the highest chance of failure. And a 100 is the lowest chance.
A financially stressed company is a firm which has ceased operations following a bankruptcy. Or it has voluntarily withdrawn from business operation leaving unsettled obligations. Another reason is it’s discontinued operations with loss to creditors.
Or it could be in receivership or reorganization. Maybe it has made some sort of an arrangement for the benefit of its creditors.
The Supplier Evaluation Risk Rating anticipates the chance a company will get legal relief from its creditors. Or the chance it’ll discontinue operations without paying creditors in full. Either is for over next twelve months.
The SER rating comes from D & B’s Financial Stress Score. The Financial Stress Score percentile serves as the basis for the SER Rating.
Once the Financial Stress Score percentile is set, a second set of rules apply to figure the SER Rating. The SER Rating is a probability of worldwide supplier failure. Local nations’ failure ratings are a class of 1 – 9.
A 1 is businesses with the lowest chance of supplier failure. A 9 is companies with the highest chance of supplier failure.
A D & B Credit Limit Recommendation includes two recommended dollar guidelines:
These dollar guideline amounts have a basis in historical analysis of the credit demand of customers in the U.S. payments database. So these are companies with a similar profile to the business under evaluation. And this is with respect to employee size and industry.
The guidelines do not address if a particular business can pay that amount. And they don’t address if a particular customer’s total credit limit was met.
Each set of limits comes with an analysis of the risk category a business falls into.
Or it has D & B’s assessment of how likely they are to continue to pay their obligations within the agreed-upon terms. It also shows how likely they are to go through financial stress in the next twelve months.
A D & B Rating is designed to help companies quickly gauge a business’s size and composite credit appraisal. The rating has a basis in information in a company’s interim or fiscal balance sheet. So it’s also from an overall evaluation of the firm’s creditworthiness.
5A to HH Rating Classifications show company size per worth or equity. The figure is important because a company’s size can be a reliable indicator of credit capacity.
Dun & Bradstreet assigns such ratings to businesses which have supplied a current financial statement.
This is a number, 1 through 4, and it makes up the second half of a firm’s rating. It reflects Dun & Bradstreet’s overall assessment of that business’s creditworthiness.
Dun & Bradstreet interprets analysis of company payments, financial information, public records, business age and other important factors, when available, to generate a Composite Credit Appraisal.
When there’s no current financial information, a company can’t get a Composite Credit Appraisal rating better than 2. Moreover, the 1R and 2R Rating categories show company size per total number of employees for the business.
These rating classifications are assigned to company files which do not have a current financial statement. Employee Range (ER) Ratings apply to certain lines of business not well-classified under the D & B Rating system.
These kinds of businesses get an Employee Range symbol has a basis in the number of employees and nothing else.
As a whole, when Dun & Bradstreet does not have all of the details they need, they will signify as much in their reports. But the omission of some pieces of information does not necessarily mean a specific firm is a poor credit risk.
Dun & Bradstreet’s PAYDEX score of your business can end up being one of the main reasons why a business gets credit at all.
A PAYDEX Score is Dun & Bradstreet’s proprietary dollar-weighted numerical indicator of how a company has paid its bills over the past year. The score has a basis in trade experiences reported to Dun & Bradstreet by a variety of vendors.
Also, the D&B PAYDEX Score ranges from 1 to 100; higher scores signify a better payment performance.
Dun & Bradstreet’s database includes over 250 million companies spanning the globe. So this includes around 120 million active firms. There are also about 130 million companies out of business but kept for historical reasons.
D & B continuously gathers data and works to improve its analyses to ensure the greatest degree of accuracy possible. Get a business credit report from them and stay on top of things.
So get a business credit report from Equifax; it’s in segments.
The initial section (just under the date) has identifying information relating to your company, e. g. the business name, address, and phone number, but also information such if your business is incorporated, and the date you started business.
This segment will also consist of the number of employees and your business’s yearly sales. This portion will also display if there are any alerts.
These initial sections function as a summary of the balance of the report.
The next segment consists of two scores:
Next, the report shows public records. These involve bankruptcies, judgments, and liens, and show amounts and filing dates for the most recent ones. This section also shows how these matters were satisfied, e.g. if the lien was paid off.
The next component is a pie chart showing your company’s credit usage. It graphically shows which percentage of your available credit line you are using. This is your credit utilization rate.
In the summary sector, the report shows the number of your business’s credit accounts. It also shows the date these credit accounts became active, and any amounts past due. Plus it shows your most severe status within the last 24 calendar months, the single greatest amount of credit extended, the median balance, and the average open balance.
These elements are split into financial and non-financial categories. Your company’s recent activity is also detailed. So this includes the amount of new accounts opened or delinquent accounts, the number of inquiries, and the number of updated accounts.
This area also includes a line graph which shows a trend line showing your company’s average days beyond terms by date reported. So this is for non-financial accounts only. The report will point out the recent trend, and how many days your company is behind terms.
This section also shows your business’s payment index and contrasts it to your company’s business sector.
This next portion has basic information on financial accounts like commercial credit cards and leases, showing status; open and closed dates; original and current credit limits; balance; past due amount; and your company’s 24-month history.
The details subsection elaborates on the highlights part by adding facts such as the payment amount and frequency, and whether a debt is secured.
This next portion shows balances, past due amounts, aging categories, and dates of first delinquency for the most recent 12 month period.
Non-financial payment credit experiences and status
The following area shows trade accounts and so forth, and also includes balances, aging categories, and a 24-month history.
The next component shows the particulars of what went into your business failure risk summary report.
The concluding piece of the report shows any DBA information and any related files, plus miscellaneous details which could be in a report.
So get a business credit report from Equifax and stay on top of things.
Get a business credit report from Experian; it’s in sections.
The report divides into sections. The first, as you might expect, contains basic identifying data. So this includes company name and address. But it also has any ownership information.
This section also lists key personnel and the type of business, how long it’s been operating, number of employees, and the amount of annual sales.
Next is an abridged section with the current days beyond terms. So those are late payments. It also shows predicted days beyond terms.
This section also includes an overall trend along with data points like the lowest and highest balance for the past six months. It also includes the current balance.
By including the highest amount of credit extended, the report gives an idea of the highest credit utilization rate for your company.
This portion also includes the number of payment trade lines (lines of credit) your business holds. It also shows how many times any business entity has made an inquiry into your credit history.
It also has any UCC filings. These are liens on file to support loans. The summary also contains a relative percentage showing the percent of business doing worse than yours. It also includes how many bankruptcies you have. Further, it includes the number of liens and judgments.
Next is the credit summary This shows your company’s Experian credit score and also links to information on what goes into the score and tips on how to improve it.
The next part is the payment summary. The portion includes line graphs for monthly and quarterly payment trends, and it conveniently shows where the numbers come from. The monthly payment trend is even graphed versus the industry average.
Just below this pair of graphs (and their supporting data) are three bar charts showing continuous payment trends (a trade line on report for over six months), newly reporting payment trends (a trade line on report for the first time in the last six months), and combined payment trends.
So this is the account balance for those combination trade lines.
The next section is all about how your company has done with its payments. So it is broken down into credit card and leasing accounts. It also has trade lines on file. So these are for at least six months and with updating activity during the last three months. Another piece is aged trades.
So the last are accounts not updated within the last three months. This information is broken down by supplier category, with payment trends at the bottom.
Next up are inquiries into your business’s credit. There is a summary by type of institution doing the asking by the month when they asked.
If your business has any collection filings, the listing is here. So it’s by date, collection agency name, status, and amounts disputed and collected. It also includes the closed date, if applicable.
Just below the collection filings section, the summary is fairly self-explanatory.
This part shows whatever Experian knows about your business and its relationships with these types of institutions. The data include what any credit was extended for. It also shows how much credit was extended, when a loan began, and remaining balance if any.
Next the report shows basic legal information. So this is the court with a judgment filing, the date, and how much it was for.
Tax lien filing information is similar to judgment filings except that it lists a filing location, rather than a court.
These filings just show the date; filing number; jurisdiction; name of the secured party; and activity on the filing.
Just below is the UCC filings summary, broken down by filing period and number of certain types of filings. So this includes ‘cautionary’.
Finally, Experian provides a handy list of ways to improve your own, specific report.
Get a business credit report from Experian and stay on top of things.
At times, it pays to hand over a few bucks to get business credit reports regularly. It’s a lot more convenient than to have to always remember to do this. Also, you’ll probably evaluate these reports more meticulously, as they come at a price tag.
Continue to target and use the tools that these credit reporting agencies supply, and make your life easier. After all; you’ve already got enough on your plate.
We offer monitoring of Experian and D&B for $24/month.
D&B offers Credit Signal, a means to monitor credit scores by having reports come straight to you, for a cost. You may find it’s worth it to avoid problems from letting this score slip. Also, you wouldn’t have to create and stay on top of reminders to keep up with it.
Don’t want to use Credit Signal? Not a problem, as you can get your PAYDEX report by way of D&B and, if needed, you can check with their Customer Service department. So this department exists as a part of Dun & Bradstreet itself.
Equifax also offers a risk monitoring service.
If you do not wish to shell out money for regular reports, you can instead request your company’s Equifax report. Also, if you must contest your company’s Equifax report, follow their guidelines.
You can learn to evaluate your Equifax report by checking out an example of their reports.
Experian will also send reports for a price. Therefore you can follow your Experian business credit score and the setup is easy.
But if you would rather not get regular reports, order an Experian report on their web site.
So if there are any complications or issues, question any mistakes on your report. Just follow the instructions on their web site.
So as a result of the recent data breach, there are all the more reasons to check your company and consumer credit reports. And to also be vigilant about any errors you see. What frustrates you the most about when you try to get a business credit report?