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A business credit report is a document that displays the company’s financial performance and assets over time. This will help you to know next steps in your search for financing, such as whether or not you should go further down the line to get a loan with collateral.
Business credit reports are a quick way for businesses to see how they compare to their competitors. The report is a snapshot of the company’s credit score and includes information about the company’s current debt, assets, and liabilities. Read more in detail here: what is a good business credit score.
A business credit report is a document that contains a picture of a company’s financial credit health. It will include a company’s financial background, payment history on tradelines, current credit inquiry history, and any legal filings, such as judgements, collections, and bankruptcies.
A credit score will be included in the report, which reflects your company’s creditworthiness and the degree of risk that potential creditors are willing to assume. Other information, such as a financial stability score that predicts future financial health, may be included in the report depending on the credit provider.
While any of the providers listed in this article will give you a solid picture of your company’s credit health, Dun & Bradstreet is the most commonly used credit report. The company’s CreditMonitor program is available for $39 a month. Check out Dun & Bradstreet’s website for more information.
How to Read a Credit Report for a Business
While each credit bureau’s report may vary somewhat in appearance, they will all include the same information. Any company credit report you buy should include the following elements. As you proceed through the process of securing a small business loan, it’s a good idea to get a credit report and understand it.
Description of the Company
Sample credit report from Experian showing the Description of the Company
Your Description of the Company will likely be the first thing you see on the credit report. Information you’ll find in this section includes:
Because each industry has a varied degree of credit risk, the SIC and NAISC codes are mentioned. Lower-risk sectors may find it simpler to get finance and insurance than higher-risk ones. The following SIC classes are the most dangerous:
- Investing in real estate
- Other investment options
- Car sales
- Industry of travel and transportation
- Lending and collecting money
- Restaurants
Payment History on the Tradeline
Example of Experian Payment History on the Tradeline
The Payment History on the Tradeline section shows your company’s payment history over the last three years. This section usually includes payments to vendors as well. In addition, this section includes when it was first reported to the credit bureau, payment terms, recent high credit line, maximum credit line, monthly payment, and whether it’s current or delinquent. It’ll also show how often you have been delinquent on a tradeline of 30 days late or more.
Financial History of a Business
Example of Experian’s Financial History of a Business section
The Financial History of a Business portion of the report shows your payment history with creditors, lenders, and insurers. It shows when the tradeline opened, the terms, both original and current balance, and any delinquencies in the account. Business loans, insurance policies, lines of credit, and equipment leases will show up in this section.
Legal Filings, Bankruptcies & Collections
This area will display any legal filings, bankruptcies, or collection reports that your company has filed with the credit agency. Tax liens, judgements, and accounts that have been in collections for 90 days will be included here. Lenders are less inclined to give loans to you if you have a lot of court filings on your background.
Credit Score for a Company
Example of Experian’s Credit Score for a Company section
A credit score will be included in a company credit report, just as it is in a personal credit report. While each credit reporting agency will have its own credit scoring range, they should all produce an easily understandable number. A business credit report should state your company’s degree of credit risk, the reasons that went into calculating that score, and maybe a prognosis of your company’s future credit risk based on your report.
Your Credit Score for a Company can be impacted by how much credit utilization you have, the length of time you’ve had credit, and the amount of delinquency you have on your report.
The section below will detail some of the different report providers and the range of scores each provides. It’s good to monitor your Credit Score for a Company, especially if you’re preparing to get a small business loan. Having a bad credit score could force you to pay a higher interest rate on loans or could get you turned down altogether.
Providers of Business Credit Reports
with Providers graph/chart
Dun & Bradstreet Business Credit Report
Dun & Bradstreet is the most commonly used credit report. D&B rates companies using several indices that reflect a company’s current and future credit risk. Those five scores are:
- The PAYDEX® score is a two-year measure of a company’s ability to pay its debts. The scale runs from 0 to 100, with 100 being the highest score.
- Delinquency score: Estimates the likelihood of a corporation defaulting on payments within a year. The scores range from 101 to 670, with 670 indicating the least likelihood of payment failure.
- The chance of a firm going out of business within a year is predicted by the failure score. The scores range from 1,000 to 1,610, with 1,610 being the least probable failure.
- D&B rating: Assesses a company’s financial strength on balance statements, company size, and business age. It includes a financial strength rating and a risk indicator score, which runs from 1 to 4, with 4 being the highest risk.
- Viability rating: Consists of four indications that determine the likelihood of a firm going out of business or going bankrupt. The viability score and portfolio comparison are both rated on a scale of one to nine, with one being the best. Data depth codes and corporate profile codes are also included.
As is the case with all of these providers, Dun & Bradstreet offers a variety of products that range from monthly subscriptions to one-time costs for reports. The company’s CreditMonitorTM program starts at $39 a month. You’ll need to apply for a free nine-digit Data Universal Numbering System (DUNS) number first, which can take up to 30 days to process.
Business Credit Report from Experian
To create its score, Experian gathers company data, payment and collection history, and financial data. The Credit Ranking Intelliscore from Experian ranges from 1 to 100, with 100 being the highest possible score. For $39.95, the firm provides a CreditScore ReportSM. However, you’ll need to upgrade to the ProfilePlus ReportSM for $49.95 to acquire the report that includes tradeline history. A subscription service is also available, starting at $189 per year.
Business Credit Report from Equifax
Equifax’s credit report is based on the same publicly available data as Experian’s. Equifax’s report offers two separate scores:
- Business credit risk score: This is the probability of a company defaulting on its financial commitments after 90 days. The probability range is 101 to 992, with 992 being the least probable.
- The danger of a company going bankrupt in the following 12 months is measured by the business failure score. Scores range from 1,000 to 1,610, with 1,610 being the least probable outcome.
Equifax reports can be purchased for as little as $99.95 per report on its website.
FICO® SBSSSM Credit Score for a Company
For Small Business Administration (SBA) loans, the FICO® SBSSSM is most often employed. To build a credit score, it gathers data from all three credit agencies. The FICO® SBSSSM credit score ranges from 0 to 300, with 300 indicating the least likelihood of loan default. For $49.99, you may get the score from firms like Nav. This is a month-to-month membership that may be cancelled at any time.
Conclusion
No matter which credit reporting service you choose, purchasing a business credit report will allow you to keep track of your company’s credit health. You can take care of any misreported items on the report as soon as they appear. Having a business credit report lets you know what your score is and what contributes to that score. This will allow you to make business decisions that’ll help raise your Credit Score for a Company before applying for business credit.
A business credit report is a report that contains information on the financial health of a business. This information can be used to help determine if the company has enough collateral and funds to cover its debt. The free business credit report gov provides information about the financial health of your business.
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