Published By Janet Gershen-Siegel at January 26th, 2018
Have you ever run a business credit check? We smuggled out the behind the scenes information on how to do this most necessary task. And it’ll stay on top of your business credit scores.
Your best bet as a business owner is to check business credit reports from PAYDEX, Equifax, and Experian. There are three big credit reporting bureaus for businesses.
And you really should evaluate all three of them regularly. This is because they use marginally different measurements. And so moving the needle for one can move the needle for the two others. But that’s perhaps not as much.
Do not allow your company credit scores to slide. This is because you have to catch any errors as soon as you can. And spot anything which is pulling scores down.
And then take remedial steps. You can get credit reports conveniently and stay right on top of all three scores. Do so just by following a few basic steps.
Does your small business have a terrific business credit score? Or it is any good at all?
So you are presently in business, and you are striving to keep on top of your company credit scores.
Or possibly you are not, and have decided now is a good time to start. Or perhaps your business is somewhat new, and this is the first time you’re doing this.
Regardless of your conditions, you have most likely asked this question at least once. Are my credit ratings any good?
Let’s have a look at the three commercial credit reporting bureaus. And we’ll solve this mystery at long last.
Dun & Bradstreet’s PAYDEX score of a company can wind up being among the fundamental reasons that a business gets credit in any manner.
D & B has Credit Signal. So it is a means to keep an eye on a credit score by having the reports come straight to you, for a price. You may find the cost is well worth it to avoid the inconveniences that can arise from letting this score slip.
And you would not have to develop and take care of the schedules and reminders you might need to keep up with it. That is, if you do not make use of it.
Don’t want to use Credit Signal? No worry, as you can get a PAYDEX report via D & B. And, if need be, you can call their Customer Service department. So this department exists as a part of Dun & Bradstreet itself.
Additionally, in order to review a PAYDEX report, check out what D & B provides, which is a specimen report. And there are even some higher level tips in how to interpret it.
Dun & Bradstreet’s PAYDEX score runs from 0 to 100. A PAYDEX score has a basis in payment information which is on report to the bureau. Or it is on report to data-gathering firms partnering with the agency.
D & B uses this information, in addition to a credit score and financial stress score, in order to recommend the amount of credit a credit issuer ought to extend to your business.
So as to have a PAYDEX score, 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 will need to have reports of your payments with four or more vendors.
Your small business’s PAYDEX score shows if your payments are commonly made in a timely manner or ahead of schedule. As you might expect, a greater number is better.
The scores break down as follows:
Your small business’s credit score runs from 1 to 5. 1 is the very best score. This matches your small business with other businesses with comparable payment histories. The figure reveals how frequently those companies tend to pay promptly.
This information can help credit issuers to understand your small business’s standing.
But it does not really show all of the payment information from your company.
The financial stress score also ranges from 1 to 5. This score matches your company with other businesses sharing comparable financial and business properties.
These similarities are in areas such as size or amount of time in business. This score shows how often those businesses tend to pay on time. As before, 1 is the best score. This rating is a broader look at the business landscape, versus an analysis of your company’s authentic payment history.
A terrific PAYDEX score for your small business is 80-100.
Equifax, one of the large credit reporting bureaus, supplies a risk monitoring service. So that is easier as it permits reports to go directly to you. If you don’t wish to pay for continual reports, you can as an alternative request a company’s Equifax report.
On top of that, if you have to challenge a company’s Equifax report, you can do so by following the instructions on their site. You can learn how to read through an Equifax report by taking a look at a sample of their reports.
Equifax displays 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.
Much like the PAYDEX score, Equifax’s payment index, which has its measurement on a scale of 100, shows how many of your company’s payments were made on schedule. These include both records 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 checks how likely it is your business will become severely delinquent on payments. Scores run from 101 to 992, and they assess:
Lastly, Equifax’s business failure score looks at the risk of your company shutting down. It ranges from 1,000 to 1,600, assessing these aspects:
For the credit risk and the business failure scores, a rating of 0 means bankruptcy.
An awesome Equifax score for your business is as follows:
Keep your scores in line and good things will happen.
Experian, another big credit reporting company, also offers a method for getting reports sent to you for a charge.
Thus you can monitor an Experian small business credit score here and the setup is easy. On the other hand, you might not prefer to not get ongoing reports and pay for them. So then you can order a distinct Experian report for a company on their web site.
Also, if there are any problems or matters of contention, you can challenge any inaccuracies on a company’s Experian report. Do so if you follow the directions on their web site. Learn about assessing an Experian report by examining a sampling Experian small business credit report.
Experian’s Credit Score report includes a small business credit score plus additional facts, including account histories, payment trends, and public records. Experian business credit scores run from 1 to 100.
In contrast to Dun & Bradstreet’s PAYDEX score and Equifax’s payment index, Experian takes into account a number of factors, and not merely payment histories.
The aspects which go into the calculation include:
Usually, even businesses that use credit responsibly will get a medium-low risk rating. As you might expect, older companies will have a much easier time acquiring a low-risk rating.
An awesome Experian score for your business is 76-100.
Frequently, it pays to hand over a few dollars in order to make sure you get a company’s credit reports routinely. It’s a lot less troublesome than have to remember to do this. So you’ll probably check out these reports more meticulously. That is because as they come at a price.
Continue to target and use the tools these credit reporting firms provide. And make life less complex. Because it goes without saying; you’ve already got enough on your plate.
A result of the recent data breach, there are all the more reasons to go over small business credit reports and personal credit reports. And be vigilant about any problems you find. Learn more here and get started with how to run a business credit check.