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How to Run Credit Checks for Businesses

Published By Janet Gershen-Siegel at March 10th, 2018

How to Run Credit Checks for Businesses

Run Credit Checks for Businesses – and Learn How Before Your Competition Does

Do you know how to run credit checks for businesses? Do you know exactly how to conveniently ask for and check small business credit reports?

Your best bet as a small business owner is to stay on top of your small business credit reports. These come from PAYDEX, Equifax, and Experian.

Run Credit Checks for Businesses: An Overview

There are three big credit reporting bureaus for small business. So you really need to check all three of them regularly. This is because they use slightly different yardsticks. Hence moving the needle for one can move the needle for the two others, although possibly not as much.

Do not permit business credit scores to slide. This is because you have to pounce on any mistakes as fast as you can. And spot anything which is dragging your scores down. Then afterwards take corrective action.

You can get reports easily and stay right on top of all three scores by following a few easy steps.

Run Credit Checks for Businesses at Dun & Bradstreet (PAYDEX)

Dun & Bradstreet’s PAYDEX score of your business can end up being one of the main reasons why your company gets credit at all. D & B offers Credit Signal, which is a method to track your credit score by having the reports come immediately to you. But this is for a price.

You may discover the price is well worth it to avoid the headaches that can spring from letting this score slip. And you will not have to develop and take care of the organizing and reminders you might need to keep track of if you do not make use of it.

Get a PAYDEX Report

Don’t wish to make use of Credit Signal? That’s fine, as you can receive your PAYDEX report through D & B and, if necessary, you can call their Customer Service department. So this department exists as a part of Dun & Bradstreet itself.

Additionally, to review your PAYDEX report, check out what D & B provides, which is a sample report as well as some higher level recommendations in exactly how to read it.

Your Small Business’s PAYDEX Score

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 credit reporting agency. Or it is on report to data-gathering businesses partnering with the agency. D & B uses this data, as well as a credit score and financial stress score, to recommend how much credit a lender ought to extend to your small business.

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Getting a PAYDEX Score

To generate a PAYDEX number, you must file for a D-U-N-S number via Dun & Bradstreet’s website. The number is free of charge. Plus the credit reporting agency needs to have records of your payments with four or more merchants.

Your company’s PAYDEX score shows if your payments are often made in an on time manner or ahead of schedule. As you might 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 can run from 1 to 5. 1 is the best score. This matches your small business with other companies. And these other businesses have similar payment histories. The score also shows how often those companies tend to pay on time.

This information can really help credit issuers to grasp your small business’s standing. But it does not truly demonstrate all of the payment data from your small business.

Financial Stress Score

The financial stress score also ranges from 1 to 5. This score matches your company with other small businesses sharing comparable financial and business attributes. These similarities are in areas such as size or amount of time in business.

This score shows how often those small 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 business’s genuine payment history.

A good PAYDEX score for your company is 80-100.

Run Credit Checks for Businesses at Equifax

Equifax, one of the major credit reporting agencies, supplies a risk monitoring service which is more convenient as it permits reports to come straight to you.

Get An Equifax Report

If you do not want to pay for continual reports, you can instead request your business’s Equifax report.

In addition, if you have to dispute your company’s Equifax report, follow the instructions on their site. You can learn to evaluate your Equifax report by exploring 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. All three matter.

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Equifax Payment Index

Much like the PAYDEX score, Equifax’s payment index, which has a measurement on a scale of 100, demonstrates how many of your company’s payments were made on time. These include both information from credit issuers and vendors.

But it is not meant to anticipate future conduct. This is because that is what the other two scores are for.

Equifax Credit Risk Score

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 measure:

  • 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 late or were on charge off for two or more billing cycles
  • Length of time since the opening of the oldest financial account

Equifax Business Failure Score

Finally, Equifax’s business failure score looks at the chance of your small business closing. It ranges from 1,000 to 1,600, judging these factors:

  • Total balance to total current credit limit average utilization in the past three months
  • How much time since the opening of the oldest financial account
  • Your business’s worst payment status on all trades in the most recent 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 Score Analysis

For the credit risk and the business failure scores, a rating 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

Run Credit Checks for Businesses at Experian

Experian, one more big credit reporting company, also offers a means for receiving reports sent to you for a fee. As a result you can follow your Experian small business credit score and the setup is easy.

Get an Experian Report

But if you would rather not get continuing reports (and purchase them), then you can order an Experian report for your business on their site.

Additionally, if there are any problems or matters of contention, you can challenge any inaccuracies on your business’s Experian report if you follow the directions on their site.

Find out about reading through your Experian report by evaluating a sampling Experian small business credit report.

Your Company’s Experian Company Credit Score

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

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

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Experian Scoring Factors

The elements that go into the calculation include:

  • Lines of credit your company has an application for in the prior nine months
  • New lines of credit you’ve begun in the past six months
  • Your company’s years in business
  • Payment history in the past twelve months

More Experian Scoring Factors

  • Lines of credit in use in the past six months
  • Collections amounts within the previous seven years
  • Percentage of available credit in use
  • Number of payments one – 30 days late, or 31 days or more late
  • Number of non-net-30 lines of credit. So that means the payment is due in less or more than 30 days.

Often, even businesses which use credit conscientiously will get a medium-low risk rating. As you might expect, older small businesses will have a less difficult time earning a low-risk rating.

A good Experian score for your company is 76-100.

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Often, it pays to hand over a few dollars. This is so as to make sure you get your small business credit reports routinely. It’s a lot more convenient than have to remember to do this. And you’ll probably evaluate these reports more meticulously, as they come with a price.

Keep on target and use the tools these credit reporting firms supply. And make your life less complex. After all; you’ve already got enough on your plate.

Because of the recent data breach, there are even more reasons to check your business and consumer credit reports. And be vigilant about any mistakes you locate. Discover this new way to run credit checks for businesses and get credit scores and reports.

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