Business credit begins on the merits of your personal credit history. Dun & Bradstreet, Equifax, and Experian are three bureaus under which you can build creditworthiness for your business. Lenders use these business credit profiles from the bureaus to determine your creditworthiness. Signing up for all three is an option but not entirely necessary.

Unlike personal credit bureaus, business credit bureaus require that you register to build your credit profile and obtain credit scores. Each one of these bureaus has different prices to register. There are benefits to registering for each credit bureau. Still, as a general rule, every business should register with Dun & Bradstreet because it’s the most universally requested and used by banks and lenders.

Business credit scores are calculated differently depending on bureau standards. However, some common components for calculation are payment history, industry risk, debt & debt usage, length of credit history, and company size. The most crucial element in this list is your payment history. Your business’s payment history will exemplify its financial reliability and punctuality. Let’s jump into more details about each bureau with this basis in mind.

Dun & Bradstreet

This bureau focuses solely on business credit. Therefore, their reporting principally covers how a business interacts with suppliers and vendors. Hence, your suppliers will request your D&B report before engaging in business trade credit with your company. In addition to the business-to-business data, your D&B profile includes industry data, historical data, and public records to make up your credit scores. Of all the scores, PAYDEX is the most well-known.

PAYDEX Score

The 100- point PAYDEX score is calculated with data from your vendors and suppliers over a 12-month period. If suppliers or vendors do not report the information to Dun & Bradstreet, it will not be included in calculating your PAYDEX score. Therefore, we recommend using vendors and suppliers who are diligent in their reporting as it affects your business creditworthiness.

Other Scores from Dun & Bradstreet:

• Delinquency Predictor Score measures the likelihood of your business going bankrupt or paying bills late during the next 12 months.
• Failure Score predicts your likelihood of seeking legal relief from creditors or the overall failure of the business during the next 12 months.
• Supplier Evaluation Risk Rating predicts the probability of your business halting the delivery of goods or services in the next 12 months.
• Dun & Bradstreet Rating utilizes your business’s financial statements and public information to form an overall assessment of your business creditworthiness.
• Credit Limit Recommendation is created on the basis of business size, industry, and payment history. Banks and lenders most commonly use this rating.

Equifax

Equifax uses data from the Small Business Finance Exchange to create a report. The SBFE is a collective of small business lenders in the United States who report the data of your business payments and customers. Banks use this information to evaluate the creditworthiness of your business.

Other Equifax Credit Reporting:

• Payment Trend and Payment Index to compare your business’s payment trends against the industry averages.
• Equifax Business Credit Risk Score predicts the probability of your business receiving a 90-day severe delinquency or charge-off in the next 12 months. The low end of this score starts at 101 and ranges to 992.
• Equifax Business Failure Score predicts how likely your business will file for bankruptcy in the next year. This scoring range is from 1000 to 1610, with the lower number indicating more risk.

Experian

Experian is known for the most balanced rating because they use bank and trade data to calculate their ratings. This bureau gathers information from suppliers, public information, lenders, and other available databases. This information includes outstanding balances, payment habits, credit utilization, liens, judgments, bankruptcies, and the number of credit transactions with your bank. The age and size of your business and Standard Industry Classification are also included in your 0-100 Experian Business Credit score.

• 1-15 High Risk
• 16-30 Medium Risk
• 31-80 Good Credit
• 81-100 Excellent Credit

Other Experian Rating:
Financial Stability Risk Rating uses a scale of 1-5 to delineate the likelihood of your business entering financial distress or bankruptcy in the next year—the lower the rating, the lower the risk in this case.

How Long Does Data Remain on My Business Credit Report?

Each bureau differs slightly in the shelflife of your credit report information. However, Experian follows these guidelines:

• Trade Data: 36 months
• Bankrupcies: nine years and nine months
• Judgments: six years and nine months
• Tax Liens: six years and nine months
• Uniform Commercial Code Filings: five years
• Collections: six years and nine months
• Bank, Government, and Leasing Data: 36 months

Is My Business Credit Report Accurate?

Your business credit report is only as accurate as the data made available to the bureaus. Make updating your information (at least) yearly a priority for this reason. If you encounter inaccurate or out-of-date information on your report, use the dispute resolution processes on the bureau sites. It can be a worthwhile tradeoff to pay for your reports to understand your business credit. Another option to consider is the business credit monitoring services offered by the bureaus, which alert you to changes in your business’s score or report.

We hope this article will help you understand the ratings and necessary components in the subject of business credit bureaus. You have access to everything you need to cultivate a strong business credit profile. To set yourself up for continued success, calendar a day for yourself once a year to keep the information up-to-date. A good business credit profile will make it easier to secure funding and negotiate with your suppliers and vendors.

Because every bureau offers different values depending on the funding you’re trying to obtain and what your business does, contact Propel to help you decide which bureaus will reap the most benefits for your purposes. No question is too small. We are always available to take calls and assist with your funding strategy questions.