Wednesday, February 17, 2016

How to Read Your Business Credit Report

Just as you monitor your personal credit score by reviewing your credit reports periodically, it’s important to keep up to date on your business’s credit score by regularly reviewing its credit reports, too. Your business credit score affects your ability to get loans, enter into leases, and make purchases—and since other businesses, banks, and lenders can check it at any time without your permission, you want to make sure that it’s completely accurate.

But making heads or tails of your business credit report can be tricky. Here’s what you need to know.

Reading Your Credit Report

There are three main business credit reporting agencies: Dun & Bradstreet (D&B), Experian, and Equifax. You should review each one’s credit report of your business: they’ll all include the same basic information, but can differ on some points here or there.

Company Information

Your credit report will list your business’s name, phone number, and address. It might also include other details, like SIC or NAICS codes specifying your industry, form of business, any parent companies or subsidiaries, DBAs, annual sales, and the names of key personnel.  

Age of Business

In general, the older a business is, the more stable it looks to potential lenders and suppliers.

Payment History

This might be broken out into trade payment history, like payments to suppliers, and commercial financial payment history, like your payments on business loans, equipment leases, or business insurance.

Legal Issues

Any past or outstanding lawsuits, liens, or court judgments will be included on your business credit report. These include any Uniform Commercial Code (UCC) filings your company has, including liens against your business placed by a lender.

Bankruptcy and Collections

The report will show any history of bankruptcy filings and/or overdue accounts that’ve gone to collections.


Make sure every element of your credit report is accurate. For instance, if your SIC or NAICS code is wrong, your business might be mistakenly categorized as being in a risky industry when, in reality, you’re perfectly safe. If you see any problems, follow the process for reporting them to that specific credit agency, and check for the same issue across the other reports.

Understanding Your Credit Score

Each business credit reporting agency calculates your credit score based on the information it gathered. The specific numeric value of a good credit score might vary from one agency to another. Don’t panic if you see a credit score of, say, 80. Unlike personal credit scores (also called FICO scores), which range from 350 to 800, business credit scores are calculated based on each credit reporting agency’s own algorithms, and typically top out at 100.

Here’s a closer look.

Dun & Bradstreet

D&B calculates your business’s PAYDEX score, which ranges from 0 to 100, with 80 and above indicating your business is a good credit risk and 49 and below indicating your business is a poor credit risk. D&B also provides a commercial credit score, which predicts how likely your business is to become severely delinquent on payments within the next 12 months, and a financial stress score, which predicts how likely your business is to fail within the next 12 months. Both of these rank your business from 1 to 5, with 1 being the highest.


Equifax calculates a payment index, ranging from 0 to 100, which reflects your payment history. It also provides a Credit Risk Score that ranges from 101 to 992 and measures how likely your business is to become severely delinquent on payments within the next 12 months. Finally, the Business Failure Score, based on similar factors, ranges from 1,000 to 1,880 and measures how likely your business is to close within the next 12 months. For both, higher numbers indicate better credit risks.


Experian uses a wider variety of factors than the other two to come up with your Credit Ranking Intelliscore, which tops out at 100 and takes into account your number of years in business; how many lines of credit you’ve applied for, opened or used recently; available credit; and late payments and collections.


You’ll have to pay to get a copy of your business credit score, but it’s a worthwhile investment. Each business credit reporting agency offers a variety of options for getting your credit report, as well as for monitoring your business credit on an ongoing basis.

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