Learn how to check a business credit rating and stay several steps ahead of your competitors.
Your best option as a small business owner is to stay on top of your business credit reports from PAYDEX, Equifax, and Experian.
There are three big credit reporting agencies for businesses. And you really ought to check all three of them frequently. So this is because they use slightly different touchstones. So moving the needle for one can move the needle for the two others, though maybe not as much.
Save Your Scores!
Do not permit your small business credit scores to slide. This is because you have to pounce on any errors soon as you can. And determine anything which is dragging your scores downward. And afterwards take corrective action. You can get your reports conveniently and stay right on top of all three scores by following a few straightforward steps.
These steps will stand you in good stead for checking other business credit ratings as well.
How to Check a Business Credit Rating at Dun & Bradstreet (PAYDEX)
Dun & Bradstreet’s PAYDEX score of your small business can end up as one of the main reasons why your company gets credit at all. D & B furnishes Credit Signal, which is a means to keep track of your credit score by having the reports come straight to you, for a price.
You may discover the price is well worth it to avoid the inconveniences that can spring from letting this score slip, and to not need to develop and handle the organizing and reminders you might need to keep track of if you don’t use it.
Don’t want to use Credit Signal? It’s no problem, as you can acquire your PAYDEX report via D & B and, if needed, you can check with their Customer Service department. So this department exists as a section of Dun & Bradstreet itself.
Furthermore, in order to review your PAYDEX report, check out what D & B provides, which is a sample report and even some higher level guidelines in the best way to analyze it.
Your Company’s PAYDEX Score
Dun & Bradstreet’s PAYDEX score ranges from 0 to 100. A PAYDEX score has a basis in payment details which is on report to the agency. Or it is on report to data-gathering firms partnering with the credit reporting agency.
D & B uses this information, as well as a credit score and financial stress score, so as to recommend the amount of credit a lender ought to extend to your business.
Getting a PAYDEX Score
In order to get a PAYDEX score, you must file for a D-U-N-S number via Dun & Bradstreet’s site. The number is free. In addition the credit reporting agency needs to have reports of your payments with four or more vendors.
Your small business’s PAYDEX score shows if your payments are normally made on time or ahead of schedule. As you may expect, a higher number is better.
PAYDEX Score Details
The scores work out 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 company’s credit rating ranges from 1 to 5. 1 is the best score. This matches your small business with other companies with comparable payment histories. The figure shows how frequently those businesses tend to pay on time.
This information can really help lenders to comprehend your small business’s standing. But it does not genuinely demonstrate all of the payment records from your small business.
Financial Stress Score
The financial stress score also ranges from 1 to 5. This score matches your company with other companies sharing similar financial and business properties. These similarities are in areas like size or amount of time in business. This score demonstrates how often those small businesses 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 small business’s actual payment history.
So a good PAYDEX score for your business is 80-100.
How to Check a Business Credit Rating at Equifax
Equifax, one of the big credit reporting firms, supplies a risk monitoring service which is more convenient as it enables reports to come directly to you. If you don’t want to purchase ongoing reports, you can instead order your small business’s Equifax report.
Also, if you need to contest your business’s Equifax report, you can do so by adhering to the instructions on their web site. You can learn how to check your Equifax report by browsing through a specimen of their reports.
Your Company’s Equifax Score
Equifax shows three separate business determinations on its commercial credit reports. These are the Equifax payment index, your business’s credit risk score, and its business failure score.
Equifax Payment Index
Similar to the PAYDEX score, Equifax’s payment index, which has its measurement on a scale of 100, shows how many of your small business’s payments were made on schedule. These include both data from credit issuers and vendors. But it’s not meant to forecast future behavior. 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 range from 101 to 992, and they assess:
- 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 delinquent 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
Finally, Equifax’s business failure score looks at the likelihood of your business closing. It runs from 1,000 to 1,600, judging these elements:
- Total balance to total current credit limit average utilization in the previous three months
- The length of time since the opening of the oldest financial account
- Your small business’s worst payment status on all trades in the prior 24 months.
- Evidence of any non-financial transactions (e. g. vendor invoices) which are late 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.
So a great Equifax score for your small business is as follows:
- Payment Index 0-10
- Credit Risk score 892-992
- Business Failure score 1400-1600
How to Check a Business Credit Rating at Experian
Experian, another big credit reporting agency, also provides a method for receiving business credit reports sent to you for a fee. For this reason you can keep track of your Experian small business credit score and the setup is simple.
On the other hand, if you would rather not get regular reports (and purchase them), then you can order a distinct Experian report for your firm on their site.
Likewise, if there are any complications or errors, you can contest any mistakes on your company’s Experian report if you follow the instructions on their website. Learn about assessing your Experian report by examining a sampling Experian business credit report.
Your Business’s Experian Commercial Credit Score
Experian’s Credit Score report includes a small business credit score along with additional information, such as account histories, payment trends, and public records. Experian commercial credit scores range from 1 to 100.
In contrast to Dun & Bradstreet’s PAYDEX score and Equifax’s payment index, Experian takes into consideration a number of factors, and not just payment histories.
Experian Scoring Factors
So the elements which go into the calculation include:
- Lines of credit your small business has an application for in the previous nine months
- New lines of credit you’ve begun in the past six months
- Your small business’s years in business
- Payment history in the last twelve months
More Experian Scoring Factors
- Lines of credit in use in the last six months
- Collections totals in the prior seven years
- Percent of available credit in use
- Number of payments one – 30 days overdue, or 31 days or more late
- Number of non-net-30 lines of credit (that means the payment is due in fewer or greater than 30 days).
In most cases, even businesses which use credit conscientiously will get a medium-low risk rating. As you might expect, older companies will have a much easier time acquiring a low-risk rating.
So a good Experian score for your company is 76-100.
How to Check a Business Credit Rating and Help Keep Your Business Going
Due to the recent data breach, there are all the more reasons to review your company and consumer credit reports, and be vigilant about any mistakes you catch. Discover this new way how to check a business credit rating.