Learn How to Check Business Credit Like a Boss!
If you know how to check business credit then you’re miles ahead of your competition.
Your best option as a business owner is to stay on top of your business credit reports. These come from PAYDEX, Equifax, and Experian. There are three big credit reporting agencies for businesses. And you absolutely need to assess all three of them routinely. This is because they use slightly different measurements. So moving the needle for one can move the needle for both of the others. But it’s maybe not as much.
Do not let your business credit scores slide. This is because you have to catch any mistakes as soon as you can. And also as pinpoint anything which is pulling your scores downward. Then afterwards take corrective steps.
You can get your reports easily and stay right on top of all three scores by following a few easy steps.
Are Your Business Credit Scores Any Good?
Does your company have a good business credit score?
So you are currently in business, and you are working hard to keep on top of your business credit scores. Or maybe you aren’t, and have determined now is a good time to start. Or perhaps your business is reasonably new, and this is the very first time you’re doing this.
Despite your circumstance, you’ve most likely asked this question at least once. Are my credit scores any good?
Let’s take a look at the three commercial credit reporting bureaus and solve this mystery once and for all.
How to Check Business Credit: Dun & Bradstreet and PAYDEX
Dun & Bradstreet’s PAYDEX score of your company can wind up as one of the main reasons that your business gets credit in any way.
D & B has Credit Signal, which is a method to keep track of your credit score by having the reports come straight to you, for a cost. You may find the fee is well worth it in order to avoid the worries that can spring from letting this score slip.
Credit Signal Details
Don’t wish to use Credit Signal? Not to worry, as you can receive your PAYDEX report through D & B. And, if needed, you can consult with their Customer Service department. So this department exists as a part of Dun & Bradstreet itself.
Furthermore, in order to review your PAYDEX report, check out what D & B provides. So that is a specimen report and even some higher level guidance in the best way to analyze it.
Your Company’s PAYDEX Score
Dun & Bradstreet’s PAYDEX score runs from 0 to 100. A PAYDEX score has a basis in payment details which is on report to the CRA. Or it is on report to data-gathering businesses partnering with the agency.
D & B uses this data, along with a credit score and financial stress score, to recommend just how much credit a credit issuer ought to extend to your business.
Getting a PAYDEX Score
In order to get a PAYDEX number, you must file for a DUNS number by means of Dun & Bradstreet’s web site. The number is absolutely free. In addition the credit reporting agency needs to have records of your payments with four or more vendors.
Your small business’s PAYDEX score shows if your payments are often made without delay 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 business’s credit rating ranges from 1 to 5. 1 is the best score. This matches your business with other businesses with comparable payment histories. The score reveals how often those small businesses tend to pay punctually. This data can help lenders to understand your company’s standing.
But it does not genuinely show all of the payment data from your business.
Financial Stress Score
The financial stress score also runs from 1 to 5. This score matches your business with other small businesses sharing comparable financial and business traits. These similarities are in areas like size or amount of time in business.
This score demonstrates how often those comparable businesses tend to pay on time. As before, 1 is the best score. This rating is a more comprehensive investigation of the business landscape, as opposed to an analysis of your business’s actual payment history.
A decent PAYDEX score for your small business is 80-100. This is how to check business credit.
How to Check Business Credit: Equifax
Equifax, one of the large credit reporting firms, supplies a risk monitoring service. So it is more convenient as it permits reports to come straight to you.
If you don’t wish to shell out money for ongoing reports, you can alternatively order your company’s Equifax report. In addition, if you have to question your company’s Equifax report, you can do so by adhering to the guidelines on their website.
You can learn how to evaluate your Equifax report by checking out a specimen of their reports.
Your Small Business’s Equifax Score
Equifax displays three distinct business determinations on its business credit reports. These are the Equifax payment index, your small 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 gauge on a scale of 100, demonstrates how many of your business’s payments were made punctually. These include both information from credit issuers and vendors.
But it’s not meant to forecast future activity. That is what the other two scores are for.
Equifax Credit Risk Score
Equifax’s credit risk score assesses how likely it is your company will become severely delinquent on payments. Scores range from 101 to 992, and they evaluate:
- Available credit limit on revolving credit accounts, e. g. credit cards
- Your business size
- Proof of any non-financial transactions (e. g. merchant 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
Lastly, Equifax’s business failure score looks at the risk of your small business shutting down. It runs from 1,000 to 1,600, reviewing these factors:
- Total balance to total current credit limit average utilization in the last three months
- The length of time since the opening of the oldest financial account
- Your company’s worst payment status on all trades in the past 24 months.
- Proof 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 score of 0 means bankruptcy.
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
Keep your scores in line and good things will happen. This is how to check business credit.
How to Check Business Credit: Experian
Experian, one more big credit reporting firm, also provides a method for obtaining reports sent to you for a charge. Therefore you can oversee your Experian small business credit score and the setup is easy.
Having said that, if you would rather not get regular reports (and purchase them), then you can order a separate Experian report for your business. You can do so on their web site.
Additionally, if there are any troubles or errors, you can challenge any mistakes on your business’s Experian report. Make sure to follow the directions on their site.
Learn about reading through your Experian report by checking a sample Experian small business credit report. This is how to check business credit.
Your Business’s Experian Commercial Credit Score
Experian’s Credit Score report includes a company credit score plus other facts, such as account histories, payment trends, and public records. Experian commercial credit scores range from 1 to 100.
Unlike Dun & Bradstreet’s PAYDEX score and Equifax’s payment index, Experian takes into consideration a number of factors, and not simply payment histories.
Experian Scoring Factors
The details that go into the calculation include:
- Lines of credit your business has an application for in the most recent nine months
- New lines of credit you’ve begun in the previous six months
- Your business’s years in business
- Payment history in the previous twelve months
More Experian Scoring Factors
- Lines of credit in use in the last six months
- Collections totals in the previous seven years
- Percentage of available credit in use
- Amount of payments one – 30 days late, or 31 days or more late
- Amount of non-net-30 lines of credit (that means the payment is due in less or more than 30 days).
Normally, even companies that use credit sensibly will get a medium-low risk rating. As you might expect, older companies will have an easier time getting a low-risk rating.
A good Experian score for your company is 76-100.
In many instances, it is a good idea to hand over a few bucks. This is so you can be sure you receive your business credit reports routinely. It’s a lot more convenient than have to remember to do this. And you’ll probably evaluate your commercial credit reports more carefully, as they come at a price tag.
Stay on target and use the resources these credit reporting companies offer. And make your life easier. After all, you’ve already got enough on your plate.
Because of the recent data breach, there are all the more reasons to assess your company credit reports and personal credit reports. And be vigilant about any issues you locate. Learn more here and get started in learning how to check business credit.