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What is a Business Credit Report and Why Does it Matter?

Business Credit Report

A business credit report is very similar to an individual credit report or credit score. It is a number based on a variety of factors that assesses the creditworthiness of a business. Just as a person should be mindful of their own credit score in order to be able to make sure they are considered creditworthy, a business should do the same. It’s imperative that businesses not only keep track of their business credit, but also make an effort towards improving it in order to help their business continue on a growth trajectory. Essentially, good credit is a major key to getting approved for trade credit and financing. If your business’s credit report is low or bad, potential partners may hesitate to work with you because your company holds too much credit risk. Your business credit report can be pulled from three major consumer credit bureaus: Experian, Equifax and Dun & Bradstreet.

What Factors Influence Your Credit Report?

Your business’s credit report is based on several variables, including information from banks and companies that you do/have done business with. Information may include:

  • Payment history

  • Account details, usually including when you opened each account

  • Public records such as liens, judgments and bankruptcies

  • Outstanding debts

  • Company information including number of employees, sales, ownership, and subsidiaries

What can my Organization Do to Improve Our Credit Score?

Payment history is perhaps one of the largest factors when calculating a credit score. Missing payments or having a history of being unable to pay debts will drastically decrease your score and raise red flags to potential lenders or suppliers. The credit utilization ratio is another vital factor. A high credit utilization ratio could indicate that a business has a lot of financial risk and is relying too heavily on debt to finance its operations. This could have an impact on their ability to repay loans in the future.

While a lot of these factors may seem familiar based on what you know from personal credit scores and reports, one big difference in a business credit report is the score range. Personal credit scores range from 250 - 900, while business credit scores on the other hand can range from 1 to 100. A second difference between personal and business credit scores is that business credit scores are available to anyone willing to pay to access a company’s score. This means that suppliers, vendors or potential partners can access this information at anytime, and make business decisions based off of a business’s perceived credit worthiness.

Checking the financial health of your business through your business credit report is an excellent habit to get into to promote the flourishing and growth of your business though creditworthiness.


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