Your business credit report can have a powerful influence on your ability to secure funding through loans, and it can even impact which other companies are interested in doing business with you. If you don’t know what’s on your business credit reports (there are four major reporting companies), you should definitely make the effort to find out, because they can literally kill your business, or help spur it on to success.
The four major credit-reporting bureaus for business are Dun & Bradstreet, Experian, FICO, and Equifax, and although each has a different way of expressing your credit-worthiness, all are based on pretty much the same information: how quickly you pay your bills, your public records, your level of indebtedness, and your current financial condition.
Dun & Bradstreet
This credit bureau uses the following indicators to express your credit-worthiness:
• PAYDEX score – this is an indicator of how likely it is that your company will not pay its bills promptly
• Supplier evaluation risk rating – this is D&B’s predictor of the likelihood your business will close during the coming year
• Financial stress score – a numeric expression of the likelihood your company will experience serious financial stress at some point in the next 12 months
• Delinquency predictor score – there are several scenarios covered by this number, including the risk your company will close without honoring its debts, the likelihood you will request relief from creditors, or that you will undergo severe delinquency, all within the next year.
The indicators used by Equifax are:
• Payment index – this is a report which shows how likely your business is to make payments promptly during the next 12 months
• Delinquency and failure scores – these are predictions of how likely it is that your company will go delinquent with debts in the next year, or how likely it is to go completely bankrupt somewhere in that same time frame.
FICO makes use of these indicators of financial credit-worthiness:
• Business credit score – FICO calls this their Small Business Service Scoring SM, and it is comprised of data extracted from credit bureaus, consumer credit reports, and your personal credit score. The Small Business Administration likes to use this indicator as the basis for decision-making about loans it makes available.
Experian makes use of a single credit indicator:
• Business credit score – called IntelliScore Plus SM, this credit score includes hundreds of different business elements, all of which are submitted by consumer and commercial sources, and which when considered in total, represent your company’s overall credit-worthiness.