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How to Monitor Your Business Credit with D&B, Experian, and Equifax

Published By Janet Gershen-Siegel at August 27th, 2017

Monitor Your Business Credit: Your Key to Keeping Scores High

When it comes to business credit monitoring, three significant credit bureaus, namely Dun & Bradstreet, Experian and Equifax offer the best services. These credit reporting agencies take a different approach at looking into the same information. To learn how to monitor your business credit, you need to look at all three.

As a result, they provide a different perspective while reporting on the creditworthiness of your business. Take a look at how these three major bureaus monitor your business credit by looking at their own perspectives.

Monitor Your Business Credit at Equifax

America’s largest small business lenders generate credit data which makes up the Small Business Finance Exchange or the SBFE. Equifax reports using this data to reflect the way owners of small business make their various loan payments including credit card payments. Due to the fact that this data directly reflects the way in which small and large business lenders interact, several banks make use of the report for evaluating the creditworthiness of your business.

Equifax Trade Credit Data

This bureau also collects all of the trade credit data and information from various public records to evaluate your business’s creditworthiness. However, their report depends heavily on how your business interacts with various banks as well as different traditional lenders such as credit card providers. The Equifax database processes millions of records on a daily basis. And, only with few exceptions; it is updated monthly to make sure that it stays accurate.

Monitor Your Business Credit: Understanding Your Company’s Equifax Reports

Equifax shows three separate business determinations on its commercial credit reports. These are the Equifax payment index, your company’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 in a timely manner. These include both information from credit issuers and vendors.

But it’s not meant to anticipate future conduct. That is what the other two scores are for.

Equifax Credit Risk Score

Equifax’s credit risk score assesses how likely it is your small business 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
  • Evidence of any non-financial transactions (e. g. merchant invoices) which are overdue or were on charge off for two or more billing cycles
  • Length of time since the opening of the oldest financial account

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Equifax Business Failure Score

Finally, Equifax’s business failure score looks at the risk of your company closing. It ranges from 1,000 to 1,600, evaluating these aspects:

– Total balance to total current credit limit average utilization in the previous three months

– How much time since the opening of the earliest financial account

– Your small business’s worst payment status on all trades in the previous 24 months.

– Proof of any non-financial transactions (e. g. vendor invoices) which are delinquent 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.

An awesome Equifax score for your small business is as follows:

  • Payment Index 0-10
  • Credit Risk score 892-992
  • Business Failure score 1400-1600

Monitor Your Business Credit at Dun & Bradstreet (D&B)

This is the only bureau for credit monitoring strictly focused on business credit. It looks into your business’s interactions with suppliers and vendors. Several potential suppliers go through the Dun & Bradstreet report on your business prior to offering credit terms. This means it is crucial for you to keep the D&B report of your business updated and accurate.

D&B Reports

Dun & Bradstreet prepares five reports, but the 100-point PAYDEX® score is the most popular among them. Dun & Bradstreet looks into the business-to-business data submitted by suppliers. And it looks into the historical payment history of your business, industry data, and public records to create your business profile at Dun & Bradstreet.

D&B Predictive Scores

D&B also designs three predictive-based scores in order to predict the performance of your business in the upcoming 12 months. These include the following scores.

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Supplier Risk Rating

The Supplier Evaluation Risk Rating (SER) – This rating forecasts if your business will quit delivering its services and goods.

Financial Stress Score

The Financial Stress Score – So this score forecasts if your business is likely to experience any financial distress within the upcoming 12 months.

Delinquency Predictor Score

The Delinquency Predictor Score – And this score forecasts if your business has the potential to pay all the bills within the deadline.

Dun & Bradstreet’s predictive scores look into the future through evaluation of industry data, past performance, trade references, as well as your profile-based company information. You must ensure that the profile you create is accurate, as it is common for simple things like a Standard Industry Classification (SIC) code to be wrong. This kind of an error can place your business at a higher risk category and make it tougher for you to obtain any loan.

These performance based scores represent the past performance of a business in a 24-month time period.

Monitor Your Business Credit: Understanding Your Small Business’s PAYDEX Reports

Dun & Bradstreet’s PAYDEX score ranges from 0 to 100. A PAYDEX score has a basis in payment data which is on report to the bureau. Or it is on report to data-gathering companies partnering with the agency.

D & B uses this data, in addition to a credit score and financial stress score, in order to advise how much credit a lender ought to extend to your small business.

Getting a PAYDEX Score

So as to get a PAYDEX score, you must file for a D-U-N-S number by way of Dun & Bradstreet’s website. The number is free of charge. Plus the bureau needs to have reports of your payments with four or more merchants.

Your company’s PAYDEX score shows if your payments are typically made without delay or ahead of schedule. As you might expect, a greater 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 score ranges from 1 to 5. 1 is the very best score. This matches your small business with other businesses with comparable payment histories. The score reveals how frequently those small businesses tend to pay timely.

This information can help credit issuers to grasp your business’s standing.

But it does not genuinely show all of the payment data from your small business.

Financial Stress Score

The financial stress score also runs from 1 to 5. This score matches your business with other businesses sharing similar financial and business traits.

These similarities are in areas such as size or amount of time in business. This score shows how frequently those businesses tend to pay on time. As before, 1 is the best score. This rating is a broader look at the business landscape, rather than analysis of your company’s true payment history.

An epic PAYDEX score for your company is 80-100.

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Monitor Your Business Credit at Experian

Many consider this bureau to be the most balanced business credit reporting agency. This is because they take into consideration credit information supplied by business vendors as well as lenders. Similar to Dun & Bradstreet and Equifax, Experian also gathers information available in various public records along with information from collection agencies, credit card companies and various other databases.

Experian Scoring Methodology

Experian takes into consideration your business’s total credit transactions made, your company’s payment habits, any outstanding balances, current liens details (if any), available credit for use, and bankruptcies, and judgments for evaluating the credit of your business. The SIC codes and the time period for which you have been in business as well as the business size – these all form part of the Experian 100-point business credit score.

Because many small businesses refuse to opt for lots of trade credit, and instead depend mostly on banks; and others refuse to access capital via banks, but depend on their terms with vendors while doing business, a majority of lenders will go through your Experian score to find out how your business reflects in both these ways.

Experian Reports

Experian also ensures that information on your credit report does not stay indefinitely. They follow a good and standard rule of thumb. However, that does not mean that all three bureaus generate the exact same report.

Monitor Your Business Credit: Understanding Your Company’s Experian Business Credit Reports

Experian’s Credit Score report includes things like a small business credit score as well as additional details, such as account histories, payment trends, and public records. Experian commercial credit scores run from 1 to 100.

Unlike Dun & Bradstreet’s PAYDEX score and Equifax’s payment index, Experian considers several factors, and not simply payment histories.

Experian Scoring Factors

The elements 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 last six months
  • Your company’s years in business
  • Payment history in the most recent 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 overdue, or 31 days or more overdue
  • Number of non-net-30 lines of credit (that means the payment is due in less or greater than 30 days).

Usually, even small businesses which use credit sensibly will get a medium-low risk rating. As you might expect, older businesses will have a much easier time attaining a low-risk rating.

A terrific Experian score for your small business is 76-100.

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Correcting Errors

There can be mistakes in any business credit report – this is a common occurrence, similar to your personal credit report. The Fair Credit Reporting Act (FCRA) does not apply to how business credit is reported. So instead you will need to dispute in a different way.

In addition, the three credit bureaus mentioned above attempt full accuracy. So they will pay attention to a formal dispute made in the event of an error. Note: the time frame for resolving a dispute may extend for a long time period. So this is in comparison to correcting mistakes on a personal credit score. But these reporting agencies leave no stone unturned until the resolution for legitimate issues are found.

Disputing D&B

Go to dnb.com/about-us/our-data.html. You must dispute by phone. Call their customer service number at: 1-800-234-DUNS (3867). For more information, go to: dandb.com/glossary/paydex.

Disputing Experian

Start by getting your report here: businesscreditfacts.com/pdp.aspx?pg=SearchForm. You can start an online dispute here: experian.com/disputes/main.html. Or you can dispute by email, by contacting BusinessDisputes@Experian.comor RFR@experian.com.

Or you can write to:

Experian —Commercial Relations – RFR
PO Box 5001
Costa Mesa, CA 92628-5001

To call about your dispute status, dial 888-211-0728. Then select option 5.

Disputing Equifax

Start by getting your report here: equifax.com/business/credit-information. For information on how to dispute, go here: equifax.com/small-business-faqs/#Dispute-FAQs. And to get a mail in disclosure request done, go here: equifax.com/cp/MailInDislcosureRequest.pdf

Final Thoughts on How to Monitor Your Business Credit

If you own a small business, maintaining a proper personal credit score is crucial. However, if your well-maintained personal credit score is backed by a strong and impressive business credit score, then your small business will get more opportunities when opting for a loan.

These three reporting agencies strive for accuracy, and make every effort to ensure that only the most accurate and updated business credit report is prepared and made available for suppliers and lenders so you can get access to the best deals when it comes to applying for a loan for your business.

 

 

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