The Three Major Business Credit Bureaus · LetsGetFunded Starter (Free)

The Three Major Business Credit Bureaus

Before we get into who are the three major credit bureaus let’s get this one fact straight. Business credit bureaus are not our friends. They report good, bad, and ugly information on us. Business credit is not covered under the Fair Credit Reporting Act (FCRA). As a result, business credit reports are not private. Anyone can view any business credit report, although there is often a charge for this information. So, who are the three major business credit bureaus?

Dun & Bradstreet (D&B)

Of the big three, D&B is the only credit bureau that focuses exclusively on business credit. They report primarily on how a business interacts with vendors and other suppliers, which is why potential suppliers often look at your D&B reports before they offer your business trade credit. In addition to business-to-business data submitted by suppliers, D&B also looks at public records, industry data and other historical data in your D&B profile to compile their credit scores, of which the PAYDEX Score is the best-known.

PAYDEX Score: The 100-point PAYDEX score reflects how reliably you’ve paid your bills and kept your financial obligations to vendors and suppliers that report to D&B. Unfortunately, if you are current with suppliers who don’t report to D&B, that information won’t be included when calculating your PAYDEX score. Because the PAYDEX score is so important, you should encourage current vendors that don’t report your credit history to D&B to do so. You may even want to switch to vendors who do.

Other D&B business credit scores include:

Delinquency Predictor Score: This score measures whether or not a business is likely to pay their bills late or go bankrupt over the next 12 months.
Failure Score: This score is designed to predict the possibility that a company will seek legal relief from creditors or go out of business and leave creditors unpaid in the next 12 months.
Supplier Evaluation Risk Rating: This rating predicts the likelihood that a business might stop delivering its goods and services over the next 12 months.
D&B Rating: This rating relies upon company financial statements and other public information to develop an overall rating for a business’s creditworthiness. Making sure that your D&B profile includes accurate, up-to-date financial statements can greatly improve your D&B rating.
Credit Limit Recommendation: Banks and creditors may look at this recommendation, which is based on a business’s size, industry and payment history.

Experian

Experian collects credit information from suppliers and lenders. They also look at information available in the public record, including legal filings from local, county and state governments, as well as information from credit card companies, collection agencies, corporate financial information and other databases.

Experian gathers a lot of data from banks, too. They look at the number of credit transactions, outstanding balances; payment habits; how much of your available credit you use; and the details of any current liens, judgments or bankruptcies. Time in business, the size of your business, and your business’ Standard Industry Classification (SIC) codes are also part of your Experian Business Credit Score called the IntelliScore+. This score ranges from 0 to 100 and breaks down as follows:

0-15: High Risk

16-30: Medium Risk

31-80: Good Credit

80-100: Excellent Credit

Experian also generates a Financial Stability Risk Rating that measures the risk of a company’s going into bankruptcy or severe financial distress in the next 12 months. This rating ranges from 1 to 5, with lower ratings indicating lower risk.

Because Experian collects both trade data and bank data, their business credit report could be considered the most balanced of the big three. Whether you rely primarily on trade credit for capital, access capital from a bank, or do both, Experian will have data on your business.

Equifax

Equifax transforms data collected by the Small Business Finance Exchange (SBFE) into a report. The SBFE is an association of U.S. small business lenders who report payment data on their small business customers. Because this data directly reflects how small businesses interact with lenders, banks use it to evaluate your creditworthiness.

Like the other business credit bureaus, Equifax also uses trade credit information and data from the public record, such as liens, bankruptcies or judgements against a business, to compile a company’s credit report. Equifax credit reports include:

Payment Trend and Payment Index: This shows the business’s payment trends over the past 12 months and how it compares to industry norms.

Equifax Business Credit Risk Score: This predicts the likelihood of a business incurring a 90 days severe delinquency or charge-off over the next 12 months. The score ranges from 101 to 992; lower scores indicate higher risk.

Equifax Business Failure Score: This predicts the likelihood of a business failing through either formal or informal bankruptcy over the next 12 months. It ranges from 1000 to 1610; lower scores indicate higher risk.

What is a Business Credit Report?

A business credit report is a record of your company’s history managing credit. Your business credit reports may also contain other information like the year your company was established, and your business registration details.

You may have a business credit file without knowing it. Or you may not yet have a business credit file, even if you have had an established business for some time.

A business credit report includes detailed information, such as:

· Business profile (company name, address, owner(s), number of employees, etc.)

· Financial information (annual sales, financial statements, etc.)

· Historical business data (date established, etc.)

· Business registration information

· Trade lines

· Credit accounts

· Payment history and collections (if applicable)

· Overall credit utilization

· Public records (bankruptcies, liens, judgments, UCC filings, etc.)

Business credit scores and risk factors that estimate the probability of late payments and business failure.

Not all business activity is reported on business credit reports. In fact, less than 10% of vendors report a positive payment history. Most all will report negative information.

If a lender or vendor does not report to the business credit bureaus, the account will not help you establish business credit.

You can check if your business already has a credit file with any of the major business credit bureaus. As a small business owner, it is important to know where you stand and see what lenders will see. You can also check the credit reports of any other business you want to review.

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