Being listed with the business credit bureaus can make the process of obtaining credit and business financing much easier. A listed company can show how it responsibly handles various forms of business financing in an easily read format known as a business credit report.
Many businesses go years before being listed with the business credit bureaus. One of my new clients had been in business for more than 18 years, and not one business credit bureau had his company listed. By not being listed, he remained in the position of having to provide a personal credit check and personal guarantee every time he attempted to obtain business financing.
As a result of tying his business financing to his personal credit, all his business debt shows on his personal credit reports. He can no longer qualify for any type of new financing because his personal credit to debt limit ratios are too high. Now he has no choice but to be listed with the business credit bureaus so that his business can find the financing it needs based on its own creditworthiness.
The business credit bureaus are privately held companies that charge a fee to provide information about a company’s credit history. They collect data from banks, suppliers, and finance companies, and look at public records such as tax liens, bankruptcies, and judgments. These business credit reporting agencies allow your business to establish its own credit profile, scores, and payment history.
Here’s a list of the major business credit bureaus that you should know about.
- Dun & Bradstreet: D&B is the primary business credit reporting agency with more than 70 million businesses registered in its database. A business credit file with D&B contains information provided by the business owner and vendors of the business. D&B issues a paydex score based on payment experiences and a DUNS rating based on financials.
- Equifax Small Business Enterprise: Equifax, one of the three primary consumer credit reporting agencies, also provides business credit evaluations for more than 22 million small businesses and corporations. Equifax has developed its own business credit scores known as the Small Business Credit Risk Score, the Financial Services Credit Risk Score, and the Suppliers Credit Risk Score. These scores also include explanations of why a business has earned a particular score based on reason codes provided in the report.
- Experian SmartBusinessReports: Experian is another one of the three primary consumer credit reporting agencies that provides business credit evaluations as well. Unlike D&B and Equifax, Experian’s SmartBusinessReports doesn’t assign a business credit score. Given this information, it would be up to the lender to interpret the risk associated with this type of payment history.
- FDInsight: This is a company that is relatively new to the business credit market. It was originally the second-largest credit reporting company in the mortgage broker field. The information on their business files is provided by the business owner or a third party and then every piece of information is verified by the staff of FDInsight. They’re known to provide the most accurate business credit report in the industry.
- Credit.net: Credit.net is a division of InfoUSA that generates credit reports on approximately 15 million businesses. The credit analysis provided by Credit.net relies on four criteria: years in business, number of employees, public records, and stability within the industry. Its business credit score is a grading system from A through C (70 to 100) and is awarded as an evaluation of the company’s credit history.
- Accurint Business: This is a new business from the combined forces of the Better Business Bureau and LexisNexis. Accurint is like Experian in that it provides public and business profile information, including credit history based on payment patterns of small, medium, and large companies.
- ClientChecker: This is a credit reporting bureau that started in 2003 and specifically targets small businesses, freelance professionals, and contractors searching for information to help determine what businesses they should do business with. Rather than providing a fixed business credit score, ClientChecker compiles information based on member feedback.
- PayNet: PayNet collects real-time loan information from more than 200 leading U.S. lenders. The company’s database has a collection of commercial loans and leases. It’s the largest proprietary database of long-term debt covering a period of 10 years.
- Cortera: Cortera provides credit information on businesses large and small but then combines it with ratings from a community of small business owners, who provide good and bad feedback on these businesses.
- ChexSystems: This reporting agency is extremely important as it has to do with your ability to open up a business checking account with a financial institution. It’s a network comprised of member financial institutions that regularly contribute information on mishandled checking and savings accounts to a central location.