Wednesday, November 25, 2020

How to Find the Best Business Credit Report




When you provide a service or sell a product to a customer, you want to be paid promptly. When you place an order with a vendor, you want to be assured they have enough financial stability to buy the raw materials they need to produce the goods you have purchased. 

When other companies have underlying financial problems, it can hurt your business and your cash flow. This is why it is important to know the financial health of companies you do business with.

It is also important to know how lenders and other companies view your financial health. Your credit history can make a difference when it comes to getting approval for a business loan, negotiating repayment terms, or getting credit from a vendor or supplier. 

All of this information is available in a business credit report. But how do you know which is the best business credit report for your business?

The Best Business Credit Report


The best business credit report is the one that provides you with the information you need to make good business decisions. Three major credit reporting agencies provide business credit reports:

  1. Dun & Bradstreet
  2. Experian
  3. Equifax

Unlike consumer credit reports that use similar standards for measurement and reporting, each business credit report agency uses different information and metrics for reporting financial health.

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Dun & Bradstreet Business Credit Report


Dun & Bradstreet produces a score, which they call Paydex, that measures the payment history.

D&B gathers information from trade references. It bases Paydex scores solely on information from companies that report your payment history. Scores range from 0 to 100.

PAYDEX SCORE

PAYMENT TIMING

100

30 days before due

90-99

20 days before due 

80-89

Pays by the due date

70-79

15 days past due

60-69

22 days past due

50-59

30 days past due

40-49

60 days past due

30-39

90 days past due

20-29

120 days past due

1-19

120+ days past due



Experian Business Credit Report


Experian gathers information from both suppliers and lenders. The credit reporting bureau also uses public records, such as liens, judgments, and bankruptcies. Experian examines payment history and available credit as part of its calculation. Scores range from 0 to 100, with a score above 80 considered to be excellent credit.

EXPERIAN INTELLISCORE

RISK

0-10

High Risk

11-25

Medium to High Risk

26-50

Medium Risk

51-75

Low to Medium Risk

76-100

Low Risk


Experian’s Intelliscore risk dashboard includes a Financial Stability Risk Rating along with a rating for repayment risk. The Financial Stability Risk rating is on a 1 to 5 scale. A low score lets lenders and suppliers know there is a low risk that a business will default or face bankruptcy during the next 12 months.

Equifax Business Credit Report


Equifax also gathers information from both suppliers and lenders. They also review public records such as liens, judgments, and bankruptcies. Equifax also evaluates business payment history and available credit.

EQUIFAX PAYMENT INDEX

PAYMENT TIMING

90-100

Pays bills by the due date

80-89

Some bills paid 1-30 days past due

60-79

Some bills paid 31-60 days past due

40-59

Some bills paid 61-90 days past due

20-39

Some bills paid 91-120 days past due

1-19

Some bills paid 120+ days past due.


Equifax produces a Credit Score risk report that ranges from 101 to 992. A high score indicates a low credit risk. Scores over 556 generally indicate a good business credit history. 

The Business Failure Score uses a scale between 1,000 and 1,710, and a score in the lower range indicates a company is more likely to go out of business or seek bankruptcy within the next 12 months.

Finding the Best Business Credit Report


If it sounds complicated, it can be because the agencies report things differently. To find the best business credit report, you need to compare the different reports and choose the one that provides the information you need while considering how the information will be used.

If you are considering applying for a business loan or need to negotiate credit terms with a vendor or supplier, you should pull a credit report on your business. 

If you are extending credit to a new customer or considering working with a new business partner, you should pull their business credit report to ensure you manage risk responsibly.

Whether you are checking on your business or evaluating another business, a business credit report will arm you with the information you need to make better business decisions and negotiate with confidence.

Accredit allows you to find the business credit report you need without signing up for any long-term subscriptions.





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