Understanding the significance of business credit reports is vital for establishing a solid financial foundation. A business credit report acts as a window into your company’s financial health, offering valuable insights into your creditworthiness, as well as a detailed overview of your payment history, financial stability, and credibility in the business world.
In this article, we will delve into each step of reading and analyzing your business credit reports effectively, as well as where to get one for your company.
How to Read Your Business Credit Report
Though business credit reports may look different depending on the credit reporting company, all of them contain the same information you need to stay on track with your business financial situation.
Business Profile
This section will most likely appear at the beginning of your report and will provide your company’s essential information such as:
- The legal name of the business
- The registered address of the business
- Phone number(s) associated with the business
- Business type or legal structure
- Years in operation or establishment date
- Number of employees
- Business industry or sector classification
- Ownership information
- Additional business identification details
Payment History
Payment history showcases your past payment patterns, including on-time payments, late payments, or defaults. This section indicates your ability to meet financial obligations promptly and is a crucial factor in determining your reliability as a borrower.
Legal Filings/Procedures
This section highlights any legal proceedings that are associated with your business. It encompasses various types of legal events, such as bankruptcies, judgments, or liens.
Business Credit Score
Your business credit score is a numerical representation of your company’s creditworthiness. While each of the three main credit bureaus have their own scoring ranges, the report should clearly indicate your business’s credit risk level as well as the factors considered in calculating the score.
Business Credit Reporting Companies
Dun & Bradstreet (D&B)
D&B generates Paydex scores that span from 0 to 100. The Paydex score primarily evaluates your payment history, placing significant emphasis on the promptness of payments made to vendors and suppliers.
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Equifax
Equifax assigns credit scores ranging from 101 to 992. Their scoring model takes into account various factors such as credit utilization, payment history, public records, and industry-specific risks.
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Experian
Experian assesses the same factors as Equifax to calculate Intelliscore Plus scores, which range from 1 to 100.
Getting a Business Credit Report for Free
Nav
With a free Nav account, you can obtain information about your business credit reports and scores, but without direct access to them. You can receive summaries, high-level information, and business credit scores based on your Experian Intelliscore or Dun & Bradstreet reports.
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Credit.net
With Credit.net, you can take advantage of a free seven-day trial that provides you with seven complimentary credit reports. Additionally, you gain access to the expertise of Credit.net professionals during this trial period.
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CreditSignal
CreditSignal, a free service offered by business credit bureau Dun & Bradstreet, provides alerts for changes to your D&B credit scores and monthly summaries of changes to your D&B business credit report. It also notifies you when your business credit has been accessed by a third party.
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Obtaining a business credit report, at least on an annual basis, is crucial for maintaining your business’s financial health and making well-informed decisions. It is equally important to stay updated and meticulously check the report for any inaccuracies or errors, which can be promptly reported back to the agency for rectification. By diligently monitoring your credit report, you can safeguard the reliability of your credit profile, enhancing your chances of securing favorable financing terms, partnerships, and vendor relationships.
