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Your Question Does a Business Have a Credit Score

Published By Janet Gershen-Siegel at March 27th, 2018

Does a business have a credit score? More importantly, does your company have a business credit score? We can help you find out if your venture has a corporate credit score.

So you are currently in business, and you are working hard to keep on top of your business credit scores. Or possibly you are not, and have determined now is a good time to start. Or maybe your small business is reasonably new, and this is the very first time you’re doing this. Regardless of your scenario, you’ve probably asked this question at least once — are my credit ratings any good?

Let’s have a look at the three commercial credit reporting agencies and solve this mystery at last.

Your Company’s Experian Business Credit Score

Experian’s Credit Score report includes a commercial credit score as well as other facts, including 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 account several factors, and not simply payment histories. The factors which go into the calculation include:

  • Lines of credit your company has applied for in the most recent nine months
  • New lines of credit you’ve opened in the prior six months
  • Your company’s years in business
  • Payment history in the prior twelve months
  • Lines of credit used in the prior six months
  • Collections amounts within the previous seven years
  • Percent of available credit being used
  • Amount of payments one – 30 days late, or 31 days or more overdue
  • Number of non-net-30 lines of credit (that means the payment is due in less or more than 30 days).

Often, even companies which use credit responsibly will get a medium-low risk rating. As might be expected, well-established businesses will have a much easier time attaining a low-risk rating.

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

A Small Business’s PAYDEX Score

Dun & Bradstreet’s PAYDEX score runs from 0 to 100. A PAYDEX score is based on payment details which is either reported to the CRA or is reported to data-gathering firms partnering with the CRA. D & B uses this data, in addition to a credit score and financial stress score, to advise how much credit a lender should extend to your business.

In order to generate a PAYDEX score, you are required to file for a DUNS number via Dun & Bradstreet’s website. The number is free. Plus the CRA must have reports of your payments with four or more merchants. Your small business’s PAYDEX score shows if your payments are generally made on schedule or ahead of schedule. As you might expect, a higher number is better. The scores break down as follows:

80-100: A low risk of late payments.

50-79: A medium risk of late payments.

0- 49: A high risk of late payments.

Your business’s credit score ranges from 1 to 5. 1 is the very best score. This matches your business with other businesses with similar payment histories. The figure reveals how often those businesses tend to pay without delay. This data can really help lenders to recognize your small business’s standing. However, it does not really show all of the payment data from your company.

The financial stress score also runs from 1 to 5. This score matches your small business with other small businesses sharing similar financial and business characteristics. These similarities are in areas such as 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, rather than analysis of your company’s genuine payment history.

A great PAYDEX score for your small business is 80-100.

Your Small Business’s Equifax Score

Equifax shows three separate 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.

Similar to the PAYDEX score, Equifax’s payment index, which is gauged on a scale of 100, shows how many of your company’s payments were made on schedule. These include both data from creditors and vendors. Nevertheless, it’s not designed to predict future behavior, which is what the other two scores are for.

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 assess:

  • Available credit limit on revolving credit accounts, e. g. credit cards.
  • Your business size.
  • Proof of any non-financial transactions (e. g. vendor invoices) which are unpaid or were charged off for two or more billing cycles.
  • Length of time since the earliest financial account was opened.

Finally, Equifax’s business failure score looks at the likelihood of your business shutting down. It runs from 1,000 to 1,600, judging these aspects:.

  • Total balance to total current credit limit average utilization in the prior three months.
  • The length of time since the earliest financial account was opened.
  • Your small business’s worst payment status on all trades in the past 24 months.
  • Proof of any non-financial transactions (e. g. vendor invoices) which are late or have been charged off for two or more billing cycles.

For the credit risk and the business failure scores, a score of 0 means bankruptcy.

A good 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.

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