How to Analyze your Business Credit Score Report
Your business credit score is different from your personal credit score in a few different ways. First, while you can generally access your personal score for free at least once a year, businesses have to pay anytime they want to know their credit score. The range also varies between the two credit systems. Personal credit is measured on a scale of 350 to 850, while business credit values go from zero to 100. Finally, the algorithm for determining personal credit score is typically standardized throughout the industry. Business credit, however, is determined by different algorithms at each major credit agency: Dun & Bradstreet, Equifax, and Experian.
A commercial credit score from Dun & Bradstreet is based on your Paydex number, which you can get by applying for free at Dun & Bradstreet’s website. The number reflects data provided to the agency regarding the financial reliability a business has with its lenders and vendors. The agency also provides predictions of the likelihood of delinquent payments or business failure within the next year. With this report, lenders have a sense of whether your business is able to pay back loans of a given amount. The score can also be used by insurance companies and landlords your company may do business with. To access your Dun & Bradstreet credit report, you must pay a fee of $61.99, but you have access to the report for six months. The report includes your Paydex score, your credit summary, your credit limit recommendation, and industry payment benchmarks.
Experian provides business credit score reports as well, but they are based on a broader range of information than just payment history. The algorithm includes legal court filings, company background information available in public records or at collections bureaus, and the size and age of the business. Experian charges just $39.95 to access the credit score for your business. The report also includes your payment trends, information on public records, and your credit summary.
Combining the strategies of the other two agencies, Equifax provides business credit reports that include predictions for future delinquency or business failure which are based on data beyond payment history. This supporting data includes the age and size of the company and the proportion of available credit used. At Equifax, the credit score number is known as the Payment Index and it can be accessed online with a fee of $99.95. The report includes public records, credit summary, and payment trends.
Having a business credit score and maintaining good credit is crucial to securing larger amounts of financing at lower borrowing rates. It also ensures that you keep your personal finances separate from that of your business. Remember to monitor your credit regularly to know how you compare to other commercial borrowers.