Your business credit profile is a vital indicator of your enterprise’s stability and credibility.

The “big three” business credit bureaus aren’t the same as the “big three” personal credit bureaus.

Like your personal credit profile, it’s based on a mix of factors, including payment history, credit utilization, and account age. However, it may also incorporate factors beyond your control, like
the overall riskiness of your industry. And unlike your personal credit profile, it’s searchable by anyone, including potential customers, suppliers, insurers, investors, and lenders – any of whom may use
that info in deciding whether to do business with you and, if so, on what terms.

In this article, we’ll cover the three major business credit bureaus and the different scores and reports they provide.

Dun & Bradstreet (D&B)

With its database of over 400 million records, Dun & Bradstreet is the largest and most widely used business credit bureau worldwide.

D&B’s best-known product is the PAYDEX® Score, which ranges from 0 (worst) to 100 (best). This score is calculated based on “trade experiences” – in other words, how fast or slow you pay your bills. A score of 80 means you tend to pay your bills right on time, while a score of 50 means you’re often a month or more behind.

This score is dollar-weighted (i.e., larger amounts count more) and aggregates anywhere from three to 874 trade experiences over a specified period. Just as you might need a minimum FICO® Score to qualify for a mortgage or auto loan, many business lenders and investors want to see a PAYDEX® Score of 75 or 80, signaling that your company has a strong track record of managing its financial obligations and poses a low risk of default.

D&B also produces a Delinquency Score and a Failure Score. The Delinquency Score ranges from 101 (worst) to 670 (best) and uses predictive modeling to determine the likelihood that your business will pay bills late or seek legal relief within the next 12 months. The Failure Score ranges from 1001 (worst) to 1875 (best) and analyzes your company type, time in business, public filings, and other data to determine the likelihood that your company will fail within
the year.

To open your D&B credit file, you’ll need to request a D-U-N-S® Number. It’s free, and you can expect a 10-day wait. Once you have this unique nine-digit identifier associated with your business entity, you can choose between free or paid options for viewing the information in your file. You can also purchase a Business Information Report™ to view another company’s scores and ratings.

Experian

Experian produces several different business credit reports ranging in level of detail. The most basic option, the Credit Score Report℠, contains two numerical scores: the Experian Business Credit Score and the Financial Stability Risk Rating.

The Business Credit Score goes from 0 (worst) to 100 (best) and is calculated based on your company’s credit utilization ratio, record of on-time payments, and other factors. Scores of 76 and up predict a low risk of severe credit delinquencies in the next 12 months.

The Experian Financial Stability Risk Rating goes from 1 (best) to 5 (worst). This rating takes into account your business’s credit activity as well as the risk associated with your business type and industry. A rating of 1 indicates a 0.55% probability of severe financial distress within the next 12 months, while a rating of 5 indicates a probability of 35.27%.

Basic reports also include payment trend summaries, collection filings, leases, and liens. Premium reports provide additional metrics like industry benchmark credit scores and payment details.

Experian will automatically establish a credit profile for your business when vendors and lenders report tradeline or loan repayment activity to the bureau. You can order a single credit report for your business (or any business) online or sign up for continuous monitoring with an annual subscription.

Equifax

Equifax specializes in tailored business data and analytics solutions, including an array of tools that prospective partners and creditors can use to identify and manage credit risk.

Equifax collects many types of information on businesses in established and emerging markets worldwide, including public records, trade and financial payments, credit usage, annual sales revenue, and corporate structure. This data is processed and packaged in various ways, from one-off reports to interactive dashboards, depending on the requestor’s needs and budget.

Businesses can contact Equifax’s sales team to learn more about the data it collects, the scoring and rating models it uses, and the products it offers.

Business Credit Bureaus vs. Personal Credit Bureaus

Keep in mind that the “big three” business credit bureaus aren’t the same as the “big three” personal credit bureaus.
Of D&B, Experian, and Equifax, the latter two are probably the most familiar because they’re also key players on the personal side. TransUnion is the third major personal credit bureau, while D&B is the only bureau that focuses exclusively on the business sector.

Build Your Business Credit

Without a verifiable business credit profile, your ability to secure financing and investments will be limited to what
your personal credit can support. A good business credit score can mean lower interest rates and more favorable terms. But most business creditors aren’t required to report account activity to the bureaus, so establishing business credit requires a proactive approach. In a nutshell, here are the six steps you should take:

  1. 1. Register your business as an LLC or other separate legal entity.
  2. 2. Request a D-U-N-S® Number from D&B.
  3. 3. Open a dedicated business bank account.
  4. 4. Employ the 5-3-2 rule: Establish five trade accounts, maintain three business credit cards, and pay off two business loans.
  5. 5. Pay your bills on time every time.
  6. 6. Monitor your credit for errors or signs of fraud.

For more personalized guidance on optimizing your credit and expanding your growth potential, reach out to us.

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