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Understanding Your Business Credit Report

Similar to an individual's personal credit score, business credit is used as a statement of the business' ability to pay back any debts. A typical business credit report provides a snapshot of a company's credit history, including how it pays its bills and manages other financial obligations. The business credit bureaus gather information about trade credit transactions to create your business credit report using your business name, address and federal tax identification number.

Each business credit reporting agency performs their own mathematical evaluation to determine the credit worthiness of a business organization. Each score or rating represents the likelihood of a corporate entity repaying debt and the timeliness of payments.

The major business credit bureaus that compile and provide copies of the reports are:

  • D&B™ (Dun and Bradstreet)
    Scoring system: PAYDEX™
  • Experian Business™
    Scoring system: Intelliscore™
  • Equifax™ Business
    Scoring system: Small Business Credit Risk Score

There are a number companies that track business credit. Recently, Equifax developed the Small Business Financial Exchange which provides participating banks with a business credit report. Included in this report is data on your business's performance on open lines of credit, including credit cards and installment loan business that are reported to Equifax. You can establish a strong credit rating as well as boost credit scores for your business by paying your loans on time. Equifax scoring system range is 101 - 992, with the lower score indicating higher risk. A 0 indicates a bankruptcy on file. Up to four reason codes may be returned indicating the top factors influencing the score.

Dun & Bradstreet PAYDEX score is among the most popular. This score allows your suppliers to know the likelihood that you will be delinquent on a payment by evaluating how you paid your bills over the past year. This is based on trade experiences reported to D&B by various vendors. The PAYDEX scoring system ranges from 1 to 100, with higher scores indicating better payment performance. You will have to show at least 5 creditors reporting with timely payments to get a Paydex of 75 or better.

Credit Scores are based on a number of factors contained in your business credit report.

  • Number of trade experiences
  • Outstanding balances
  • Payment habits
  • Credit utilization
  • Trends over time
  • Recent Public record, frequency and dollar amount
  • Demographics such as years on file, Standard Industrial Classification codes and business size

Business Credit Report

Company information and background

A lot of this data is self reported, so it is up to you to make sure the data is accurate and up to date. Make sure you business name, address, phone and incorporation status are all correct. This section may also include information about number of employees, sales figures, incorporation status, and key officers

Credit Rating

Each of the reporting agencies use different scoring so their ratings may differ. Make sure you understand what your score means.

Payment History

Check your payment history for accuracy. Make sure that all your supplier relationships are represented.

Legal issues

This section will record any bankruptcy filings, outstanding lawsuits, liens and court judgments . Make sure any lawsuits that have been settled are deleted from your file.

Collection proceedings

If you have been late paying bills or have accounts in collection they will show up in this section of the report. Some late payments may be the result of disputes over merchandise or other non-financial issues.

Company age

This indicated how long your company has been in business. If you are a new company, a creditor might want to check the personal credit report of it upper management to see how they handle their personal finances.

Uniform Commercial Code (UCC) filings

This section records the liens and leases you have in place.

Since your business credit report and your personal credit report are separate, it is always important to monitor them both to have the best possible credit scores. Anyone can boost credit scores with the right tools and information. The Complete System to Repair Your Credit and Boost Your Credit Score covers every aspect of credit restoration so you can build and maintain a healthy credit profile. Download Today!