Run a Credit Check on a Business Today
You Got This: exactly how to conveniently pull and assess any business credit report. We can show you how to run a credit check on a business.
Run a Credit Check on a Business: Stay on Top of Reports
Your best bet as a small business owner is to remain on top of business credit reports from PAYDEX, Equifax, and Experian.
There are three big credit reporting agencies for small business and you really need to check all three of them regularly as they use moderately different yardsticks so moving the needle for one can move the needle for both of the others, although maybe not as much.
Do not allow your small business credit scores to slide, as you need to catch any mistakes as soon as you can, as well as detect anything which is pulling scores down then afterwards take remedial action. You can get reports conveniently and stay right on top of all three scores by following a few easy steps.
PAYDEX
Dun & Bradstreet’s PAYDEX score of a company can end up being among the main reasons why a small business gets credit in any way. D & B has Credit Signal, a way to track a credit score by having the reports come straight to you, but this is not a free credit report.
You may find the fee is well worth it in order to avoid the headaches that can spring from letting this score slip. And you would not have to produce and stay on top of the organizing and reminders you might need to keep track of if you don’t make use of it.
Don’t wish to use Credit Signal? That’s fine, as you can get a PAYDEX credit report by way of D & B and, if needed, you can connect with their Customer Service department (this department exists as a section of Dun & Bradstreet itself).
On top of that, in order to review a PAYDEX credit report, check out what D & B provides, which is a sample credit report and even some higher level recommendations on how you can analyze it.
Your Small Business’s PAYDEX Score
A PAYDEX Score from Dun & Bradstreet runs from 0 to 100. This score has a basis in payment information which is on report to the business credit bureau. Or it is on report to data-gathering firms partnering with the CRA.
D & B uses this information, in addition to a credit score and Financial Stress Score, so as to advise how much credit a loan provider should extend to your company.
Getting a PAYDEX Score
To generate a PAYDEX score, you must file for a D-U-N-S number by way of Dun & Bradstreet’s site. The number is free of charge. In addition the credit reporting agency needs to have reports of your payments with four or more merchants.
Your small business’s PAYDEX score shows if your payments are generally made on time or ahead of schedule. As you may expect, a greater number is better.
PAYDEX Score Details
The scores work out as follows:
- 80-100: A low risk of late payments
- 50-79: A medium risk of late payments
- 49: A high risk of late payments
Business Credit Score
Your business’s credit rating runs from 1 to 5. 1 is the very best score. This matches your business with other small businesses with comparable payment histories. The figure reveals how frequently those businesses tend to pay in a timely manner.
This data can really help credit issuers to comprehend your company’s standing.
But it does not genuinely demonstrate all of the payment information from your small business.
Financial Stress Score
The financial stress score also runs from 1 to 5. This score matches your company with other companies sharing comparable financial and business traits.
These similarities are in areas like size or amount of time in business. This score demonstrates how frequently those small businesses tend to pay on time. As before, 1 is the best score. This rating is a more comprehensive evaluation of the business landscape, rather than analysis of your small business’s genuine payments.
An awesome PAYDEX score for your small business is 80 – 100.
Equifax
Equifax, one of the large credit reporting firms, offers a risk monitoring service which is easier as it allows for reports to come straight to you. If you do not wish to purchase continual reports, you can instead order a business’s Equifax business credit report.
Also, if you have to question a company’s Equifax business credit report, you can do so by following instructions on their website. You can learn to evaluate an Equifax business credit report by exploring a sample of their reports.
Your Small Business’s Equifax Score
The Equifax Credit Risk Score comes from a model which they use to place specific risks. Equifax makes use of these details in its estimations, consisting of the depth of the credit details Experian can get the length of your small business credit history, as well as your business’s payment delinquency history.
Equifax then segments some 5 different scorecards together, by using statistical analysis. In order to improve their precision, Equifax suggests combining their Risk Score with their proprietary Equifax Bankruptcy Navigator Index.
The Bankruptcy Navigator Index helps forecast the chance of your company going bankrupt in the next 24 months. Equifax bases its predictive model on over 270 million different accounts.
Equifax shows three different company determinations on its industrial credit reports. These are the Equifax Payment Index, your business’s Risk Score, and its Business Failure Score.
Equifax Payment Index
Similar to the PAYDEX score, Equifax’s payment index, which has its gauge on a scale of 100, shows how many of your company’s payments were made promptly. These include information from credit issuers, small business loan providers, and vendors.
But it’s not meant to forecast future behavior. That is what the other two scores are for.
Equifax Credit Risk Score
This business credit score checks how likely it is your business will become severely delinquent on payments. Scores run from 101 to 992, and they measure:
- Available credit limit on revolving credit accounts, e. g. credit cards
- Your company size
- Proof of any non-financial transactions (e. g. vendor invoices) which are overdue or were on charge off for two or more billing cycles
- Length of time since the opening of the oldest financial account
Equifax Business Failure Score
Finally, Equifax’s business failure score looks at the likelihood of your business shutting down. It ranges from 1,000 to 1,600, judging these factors:
- Total balance to total current credit limit average utilization in the past three months
- How long since the opening of the oldest financial account
- Your business’s worst payment status on all trades in the most recent 24 months.
- Documentation of any non-financial transactions (e. g. merchant invoices) which are late or have been on charge off for two or more billing cycles.
Equifax Scoring Analysis
For the risk and the business failure scores, a rating of 0 means bankruptcy.
An epic Equifax score for your company is as follows:
- Payment Index 0 – 10
- Credit Risk score 892 – 992
- Business Failure score 1400 – 1600
Experian
Experian, another big credit reporting bureau, also offers a way for getting reports sent to you for a cost. Therefore you can track an Experian small business credit score and the setup is simple.
On the other hand, if you would rather not get ongoing reports (and purchase them), then you can order a single Experian credit report for a company on their site.
Also, if there are any complications or matters of contention, you can question any mistakes on a company’s Experian credit report if you follow the instructions on their website. Learn about assessing an Experian credit report by reviewing an example Experian business credit report.
Often, it pays to hand over a few dollars so as to ensure that you acquire business credit reports on a regular basis. It’s a lot easier than having to remember to do this and you’ll probably look at these reports more carefully, as they come with a price tag.
Stay on target and use the resources these business credit reporting bureaus supply and make your life easier. Look at your business credit score and check what it says about each business credit card you have.
Your Small Business’s Experian Commercial Credit Score
Experian’s Credit Score report includes things like a business credit score along with additional data, including account histories, payment trends, and public records. Experian company credit scores range from 1 to 100.
Unlike Dun & Bradstreet’s PAYDEX score and Equifax’s payment index, Experian takes into account various factors, and not simply payment histories.
Experian’s scoring system is called Intelliscore Plus.
What is the Intelliscore Plus Credit Score?
The Intelliscore credit score is a statistically based credit-risk analysis. The vital objective of Intelliscore is to help companies, investors, and possible future loan providers make smart judgments concerning who they should or should not do business with.
Like an auto dealer uses a consumer’s FICO score to swiftly figure out just how much of a risk a prospective customer might be, the Intelliscore credit score can provide insight on just how much of a risk a company or company owner may be.
Intelliscore Credit Score Range
The Intelliscore ratings range from 1 to 100. So the greater your rating, the lower your risk class. The chart below details each Intelliscore credit score range as well as its associated meaning.
Score Range/Risk Class
- 76 – 100 Low
- 51 – 752 Low – Medium
- 26 – 503 Medium
- 11 – 254 High – Medium
- 1 – 105 High
Computing an Intelliscore Credit Score
In the credit world, Intelliscore is regarded as one of the most dependable tools in successfully forecasting risk.
Among the ways Intelliscore maintains this claim to fame is by identifying the major variables that show if a company is likely to pay their debts.
Though there more than 800 business and owner variables comprising an Intelliscore credit score, the variables can be broken down into these essential elements:
Payment History
The business credit bureaus call this recency yet in the real world, it’s nothing more than your current payment status.
This includes the amount of times your accounts end up being delinquent, the number of accounts that are currently overdue, and your overall trade credit balance.
Frequency
Like payment history, frequency represents the quantity of times your accounts have been sent out to collections, the quantity of liens and judgments you may have, and any bankruptcies connecting with your company or personal accounts.
Frequency can likewise consist of information relating to your payment patterns. Were you regularly slow or late with payment? Did you begin paying costs late, yet over time, stopped doing so? These elements will certainly all be taken into consideration.
Monetary
This certain facet focuses on exactly how you use credit. As an example, just how much of your readily available credit is currently being used? Do you have a high proportion of delinquent balances in comparison with your credit line?
If you will begin a company or are relatively new to this game, the listing above may appear a bit overwhelming. If you haven’t started or don’t have a lengthy history of company-based deals, just how will Intelliscore rate you?
Intelliscore manages these circumstances by using a “blended model” to establish your rating. This implies that they take your consumer credit score right into consideration when determining your business’s credit score.
Your Personal Credit History and Your Experian Business Credit Scores
Much like FICO SBSS, Experian will use your personal credit score as a way to compute their business credit scores. Credit scores from the Fair Isaac Corporation (FICO) are important to Experian.
Personal credit depends on more factors than business credit. These factors include credit utilization, debt collection, credit inquiries, and the age of any given credit card.
A good business credit score comes, in part, from a good credit score on the personal side. How you pay a consumer credit card will, to any extent, matter as much as how you pay a given business credit card.
What to Do If You Can’t Check Another Business’s Credit Score
If your business’s cash flow is down or it is otherwise hurting in terms of financing, it can seem to be a luxury to check another company’s business credit score.
But extending a credit account to a company with bad credit is going to make it even harder for your business to avoid the kinds of cash problems that can eventually turn into problems with your own company credit scores.
When you extend credit without looking at credit scores, you are essentially acting like an irresponsible lender. If you end up having to write off debt, you may not be able to pay your own business debts.
Your credit scores could go down. And if your business ends up filing bankruptcy, then that will become a matter of public record.
This will harm your business’s chances with lending from the Small Business Administration (for example), as they will check credit scores every time.
Still, if you have the time, you can check the public record for a company you are considering doing business with. Lawsuits, bankruptcies, and liens are all public. But this will take longer than just looking at a business credit score.
Another way to bypass looking at credit scores is to ask around in the community. But this is far from ideal, as a company may have an axe to grind. A business credit score is a more or less purely mathematical piece of information.
But a person’s opinion is not.
Takeaways
Keep your scores up and good things will happen. Run a check on a business whenever you need to. And improve your business credit scores to get even more financing options.
