What is a Business Credit Report and Why Does it Matter?
Similar to an individual’s credit report or credit score, a business credit report 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 credit worthy, 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 you’re considered too much of a financial risk. Your business credit
report can be pulled from three major consumer credit bureaus: Experian, Equifax and
Your business’s credit report is based on a few factors, mostly from information from
banks and companies that you trade with have:
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
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 is relying too heavily on debt to finance its operations and 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.
Are you ready to grow and protect your business? Impello Global is a trade finance
advisory boutique and trade credit and political risk insurance brokerage, headquartered in Seattle, Washington. We specialize in trade credit and political risk insurance and provide advisory services to companies and lenders who are looking to expand their trade finance capabilities.
If you are a company or a lender trying to better understand trade credit insurance or
looking for guidance as to how trade credit insurance can help improve working capital
financing, our team would be delighted to learn more about your business and discuss
options available to you. Please visit our website at www.impelloglobal.com or contact
us directly at info@impelloglobal.com.
Sources:
https://www.creditkarma.com/advice/i/business-credit-reports