Published By Janet Gershen-Siegel at December 5, 2017
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.
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.
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.
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.
In order to get a PAYDEX score, you must file for a DUNS 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.
The scores work out as follows:
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.
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.
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.
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.
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’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:
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:
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:
Keep your numbers up and good things will happen.
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.
In some cases, it is a good idea to hand over a few dollars to be sure you get your business credit reports regularly. It’s a lot more convenient than have to always remember to do this and you’ll probably evaluate these reports more thoroughly. This is because they come at a price tag.
Keep on target and use the tools these credit reporting agencies provide, and make your life less complicated. It goes without saying; you’ve already got enough on your plate.
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.
So the elements which go into the calculation include:
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.
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.