A business credit bureau keeps tabs on businesses. The business credit reporting bureaus collect data from various sources, including information from lenders about payment history and information from other creditors, such as suppliers.
There are three major business credit bureaus, plus a few others. The bureaus also collect information from business credit reporting agencies about bankruptcies, liens, and judgments involving businesses. They get that information from public records.
As you know, information about a business’s financial stability is only as good as the data supplied. You should check your business credit report at least once a year.
What is a Credit Report and Score?
The information about a business is compiled into a business credit report. Based on the business credit report, a business credit score is assigned. The business credit risk score will have a rating that ranges from poor (business failure score) to excellent. Anything higher than 670 is good.
Business credit reports are the basis for the business credit score, which is used to rate the creditworthinessa of a business.
How Long Does Information Affect a Business Credit Report?
Certain information affects business credit reports for a length of time, which affects business credit scores issued by credit bureaus:
- Judgments – 6 years and 9 months
- Bankruptcies – 9 years and 9 months
- Tax liens – 6 years and 9 months
- Trade data – 36 months
- Payment history – For the length of the loan
- Financial statements – For the past 3 years
Why are Business Credit Reports Important?
Your business credit reports are compiled by a business credit bureau. They are important to you, and to other businesses.
- Your small business credit report directly impacts your business credit score. Credit scores of good and higher make it easier for you to obtain loans or get credit extended to you on purchases.
- When you make it a practice to check your business credit reports, you can take action to fix items that are affecting your credit scores. These could be inaccuracies.
- Your small business credit reports can be viewed by other businesses, such as vendors and suppliers. Good credit reports make it more likely that vendors and suppliers do business with you.
- You can check to see who (which businesses) have viewed your small business credit reports.
Where Does Business Credit Information Come From?
A number of data points can be compiled into your business credit file:
- public records
- public utilities
- real estate taxing agencies
- state taxing agencies
- court records involving judgments
- court records involving bankruptcy filings
Top Business Credit Reporting Bureaus
Each credit reporting agency has a focus. For example, your FICO Small Business Scoring Service credit reporting agency will include your personal credit score.
The big three business credit bureaus are Dun & Bradstreet, Equifax, and Experian. Each of those business credit agencies includes information from lenders, suppliers, and vendors. Each business credit reporting agency uses the Small Business Finance Exchange (SBFE) report to gather data.
Here are more specifics about the Big 3 and 2 other business credit bureaus and reporting agencies:
1. Dun & Bradstreet
The Dun & Bradstreet business credit scores are a mainstay of business credit bureaus. The Dun & Bradstreet business credit report uses a comprehensive business data focus on vendor and supplier transactions and other business-to-business data, which are key indicators of a company’s financial health. Dun & Bradstreet credit reports are viewed by potential business partners, lenders and other businesses. Dun & Bradstreet credit scores are given a rating called a Paydex score. The Paydex score is based on a compilation of information including trade payment history, business loans outstanding, business loan payment habits and m
Equifax is another well-respected name in business credit bureaus with its Equifax business credit reports. Equifax business credit scores are a compilation of small business lender reports and lender credit history information, as well as data regarding liens, bankruptcies, and judgments. As one of the big 3 business credit reporting agencies, Equifax is a reliable commercial credit bureau.
The Experian business credit score is compiled from lenders and trade data. The company works with 40 million businesses and 300 million suppliers and lenders in the US alone. Experian business credit reports include a rating called Intelliscore Plus to create a business credit profile.
TransUnion is another business credit reporting agency. TransUnion compiles all transactions involving credit and also draws on public report data. The company merges the information and issues commercial credit reports, assigning a number that establishes a financial stability risk rating.
5. FICO SBSS Score
The FICO Small Business Scoring Service is the only agency that includes personal credit scores. That makes it possible for an investor or supplier to take a look at a business owner’s personal credit reports as well as the financial obligations and credit reports of the business. The FICO SBSS Score is a number from 1 to 300. The rating is required by the SBA for loan applications and is also required by many other lenders.
How to Access Your Business Credit Report
Accessing your business credit information is easy. You can get free business credit reports on your own business, once a year. But you’ll typically have to pay a fee to get more than one report on your own business a year or to get a report on another business.
Just go to Annual Credit Report.
Can you Run a Credit Report on a Business?
Yes, and it’s a common practice used by a company that is granting business credit accounts. Before giving credit to a supplier or vendor, a small business should assess any business risk by obtaining a company’s credit report. If a company doesn’t have a strong business credit rating of at least Good, a business owner may set a credit limit or choose not to do business with the company.
Read More: How to Get a Business Loan with Bad Credit
Does an LLC Have Its Own Credit Score?
Yes. No matter which entity has been chosen for the business structure, it will have a credit score. A corporation, LLC, and other businesses have a credit score.
Image: Envato Elements
Source: Small Business Trends