Keep On Top of Your Business Credit Scores
As a small business owner, you’ve got a million things to do each day. And this is even before you get up in the morning. Evaluating your business credit scores seems like it would be the last thing on your mind.
And it might be behind everything from making shipments to handling payroll to hiring new workers. But you should not just let your business credit scores slide.
By keeping on top of your business credit scores, you can get better credit terms. Or you might even get a favorable credit decision at all. Plus you can address any money-draining mistakes in the reports. And you can do so before they affect your score.
Additionally, you can deal with anything that’s dragging your score down. These can be issues such as overdue payments. But business credit scores come from where?
Business Credit Score Reports
To keep on top of your business credit scores, you will need to keep on top of three separate reports. So these are Experian, Equifax, and your business’s PAYDEX report.
Save this page and keep these Web pages handy. Because this is a continuous process and is not a one-time thing.
Understanding Your Scores
Does your company have an epic company 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 business credit scores.
Or possibly you aren’t, and have decided now is a good time to start. Or maybe your business is relatively 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 scores any good?
Let’s have a look at the three business credit reporting agencies. And we’ll solve this mystery once and for all.
Where is Business Credit Reported? Experian
Experian reports on both business and personal credit scores. So this applies to following up on your personal credit score, which you should also be doing.
You can monitor your Experian business credit score here more easily as they will send the reports right to you.
Your Company’s Experian Commercial Credit Score
Experian’s Credit Score report includes a small business credit score plus additional details, such as account histories, payment trends, and public records. Experian company credit scores run the gamut from 1 to 100.
In contrast to Dun & Bradstreet’s PAYDEX score and Equifax’s payment index, Experian takes into account numerous factors. So they do not merely look at payment histories.
Experian Scoring Factors
The elements which go into the calculation include:
- Lines of credit your small business has an application for in the most recent nine months
- New lines of credit you’ve begun in the past six months
- Your small business’s years in business
- Payment history in the prior twelve months
More Experian Scoring Factors
- Lines of credit in use in the previous six months
- Collections amounts within the previous seven years
- Percent 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 fewer or greater than 30 days).
Typically, even companies that use credit sensibly will get a medium-low risk rating. As you might expect, older businesses will have an easier time getting a low-risk rating.
An awesome Experian score for your small business is 76-100.
Where is Business Credit Reported? Dun & Bradstreet (PAYDEX)
Dun & Bradstreet’s PAYDEX score of your company can end up being the why your business gets credit. Or maybe it does not.
This is the only one of the big credit reporting agencies for businesses which doesn’t also report on individuals’ credit scores. Note: the third reporting service for individuals is TransUnion.
You can get your PAYDEX report here. And, if you need to, you can contact their Customer Service department here. That is how they want to handle disputes. So this department is a part of Dun & Bradstreet itself.
Also, D & B’s PAYDEX Customer Service phone number is here.
D & B also offers Credit Signal, a means of keeping track of your credit score by having the reports come directly to you.
Your Company’s PAYDEX Score
Dun & Bradstreet’s PAYDEX score ranges from 0 to 100. A PAYDEX score has a basis in payment information which is on report to the CRA. Or it is on report to data-gathering companies partnering with the CRA.
D & B uses this information, alongside a credit score and financial stress score, in order to recommend the amount of credit a lender should extend to your small business.
Getting a PAYDEX Score
To have a PAYDEX score, you must file for a DUNS number by using Dun & Bradstreet’s web site. The number is free. In addition the credit reporting agency has to have records of your payments with four or more merchants.
Your small business’s PAYDEX score indicates if your payments are generally made punctually or ahead of schedule. As you might expect, a higher number is better.
PAYDEX Score Details
The scores break down 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 small business’s credit rating runs from 1 to 5. 1 is the best score. This matches your company with other small businesses with similar payment histories. The number shows how frequently those companies tend to pay punctually.
This information can really help credit issuers to understand your company’s standing.
But it does not genuinely reflect all of the payment data from your business.
Financial Stress Score
The financial stress score also ranges from 1 to 5. This score matches your business with other companies sharing similar financial and business attributes.
These similarities are in areas like size or amount of time in business. This score demonstrates how frequently those companies tend to pay on time. As before, 1 is the best score. This rating is a more comprehensive investigation of the business landscape, versus an analysis of your company’s true payment history.
An epic PAYDEX score for your business is 80-100.
Where is Business Credit Reported? Equifax
Equifax is another one of the big credit reporting agencies. And they also cover personal credit scores. So you can check those, too, while you’re at it.
Equifax offers a risk monitoring service here. So it is more convenient as it allows for reports to come straight to you.
Your Business’s Equifax Score
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.
Equifax Payment Index
Much like the PAYDEX score, Equifax’s payment index, which has its gauge on a scale of 100, shows how many of your small business’s payments were made punctually. These include both records from credit issuers and vendors.
But it’s not meant to anticipate future activity. That is what the other two scores are for.
Equifax Credit Risk Score
Equifax’s credit risk score checks how likely it is your small 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 company 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
- Amount of time since the opening of the oldest financial account
Equifax Business Failure Score
Lastly, Equifax’s business failure score looks at the likelihood of your company shutting down. It ranges from 1,000 to 1,600, reviewing these factors:
- Total balance to total current credit limit average utilization in the last three months
- How long since the opening of the oldest financial account
- Your small business’s worst payment status on all trades in the prior 24 months.
- Evidence 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 score of 0 means bankruptcy.
An epic Equifax score for your business is as follows:
- Payment Index 0-10
- Credit Risk score 892-992
- Business Failure score 1400-1600
Monitor Your Business Credit
Know what is happening with your credit. Make certain it is being reported and fix any mistakes ASAP. Get in the habit of checking credit reports. Dig into the particulars, not just the scores.
Update the details if there are inaccuracies or the relevant information is incomplete.
So, what’s all this monitoring for? It’s to contest any inaccuracies in your records. Disputing credit report inaccuracies usually means you precisely itemize any charges you contest.
Where is Business Credit Reported? Wonder No More!
Don’t leave your business credit scores to chance. Keep on top of them and make business credit work for you.
Discover this new way to understand business credit scores and reports, and you’ll be able to answer the question: where is business credit reported?