The Most Important Parts of Your Business Credit Report

Companies that use business credit cards are likely to have a business credit score on file by a business credit bureau, even if they don’t know it. These reports can be used to your advantage, particularly if you’re a business owner and have to get a financial loan or apply for another credit card. Here’s how to understand the most important parts of your business credit report.

First, business credit reports score your business on your past payment history. Scores such as Dun and Bradstreet’s PAYDEX score or Equifax’s payment index examine how many payments your company has made on time, using a scale of 1 to 100. If you choose an Experian credit score, you will get more than your payment history taken into account. An Experian score will also add in multiple factors to gauge your business credit, including lines of credit you’ve applied for, new accounts you’ve opened up, lines of credit in use, and late payments.

Reports on your business credit can also produce scores that predict the future performance of your company. If you get a score from Dun and Bradstreet, they will offer you a financial stress score. This is intended to show whether your business is likely to have problems making payments on time by matching your business with other businesses of similar characteristics, such as company size or the length of time the business has been in operation. This score is meant to provide a broad look at the business landscape you are a part of.

A credit risk score predicts the possibility that your business can have severe deficiencies making payments. This score measures the size of the company, available credit limit on credit cards or other accounts, and delays in payments to non-financial institutions. A business failure score determines how likely your business is to close by looking at factors such as delinquent payments to non-financial institutions as well as the time since the oldest financial account was opened. A rating of 0 for either of these scores will point to bankruptcy as a likely outcome. Also, you may get a supplier evaluation risk rating. This indicates the likelihood of a business no longer providing goods and services.

Finally, it is always good to check over your credit report to make sure there are no errors or missing information. Credit bureaus may not receive all the proper information from vendors or financial institutions you have dealt with. Check with all parties involved to ensure your report on your business credit is as complete and accurate as possible.