Business Credit Information

What is business credit?

Business credit is an essential measure of how creditworthy your business in the minds of banks is, finance companies, suppliers, customers and partners. So having a good business credit score can help your business get approved for that new loan, open (or expand) trade lines of credit with your suppliers/vendors or even to finally sign up that big customer you have been working with for the last several months. But the business credit industry can appear to be relatively unregulated and business owners often don’t have the in-depth knowledge of how to obtain or improve their business credit scores.

Who uses business credit?

Many owners do not realize that anyone can review their business credit at any time. It could be a potential client, lender, vendor, or a competitor. There are different privacy or disclosure rules that apply to business lending and business credit information. When applying for a business loan a bank doesn’t need to divulge if it used a copy of your business credit reports, scores, and indexes to make a decision. If businesses actually knew how easily accessible a copy of their business credit was and how limited or poorly the scores might reflect on them, they would be running to get a copy of their business credit reports.

What is included in a business credit report?

Business credit reports may contain general company information, NAICS and SIC codes, the history of the business, industry risk, business operational data, judgment and lien info, as well as a company’s payment history.

The main business credit reporting agencies are Dun & Bradstreet, Experian, and Equifax. Each credit bureau has its own database of information acquired from either the company itself or public records, as well as credit reporting companies or collections agencies. Because all major business credit bureaus maintain separate databases, they have the potential to report different information. It is important to be aware of this and to review all three when monitoring your business credit.

Does a company need to build or maintain a business credit profile?

Having access to credit or cash is essential for long-term success of a business. Therefore, building a well-balanced and positive business credit profile can be a great asset for a company. Many business owners and professionals believe if a company has credit, it will automatically be listed on their credit profile and reflect on their score. This is the furthest from the truth – many vendors, lenders, and creditors do not report to the bureaus, and it can be difficult for companies to figure out which ones do. Having a professional credit expert, guide and build the right credit can give a company an edge in getting loan approvals and the best interest rates.