Business Credit Reports & Scores Explained

Like consumers, most businesses have their own credit reports, which are then used to calculate business credit scores. But while consumer credit data carries significant weight, directly affecting everything from the insurance premiums you pay to the cost of buying a home, business credit is neither as complete nor as heavily relied upon.

Two particular limiting factors are largely responsible for this dynamic. For starters, most lending activity takes place at the personal level. Business loans are relatively hard to come by, at least compared to consumer auto loans and mortgages, and all credit cards – even those branded for business use report account information to the primary accountholder’s personal credit reports each month.  It’s thus clear that business credit reports don’t contain much that isn’t already in your more-widely-used personal reports.

The second major factor contributing to the lack of emphasis placed upon business credit is the fact that while consumers typically owe money to banks and a handful of large utility companies, businesses tend to have financial obligations to other businesses. These suppliers aren’t set up for monthly credit bureau reporting, so information pertaining to them may only make its way to your company’s credit files if your account is sent to collections.

With that being said, business credit reports and scores are out there, so it makes sense to know where your company stands. We’ll help you figure that out by explaining what information business credit reports contain, what the most common business credit scores are, and how you can improve your rating. 

Business Credit Reports: Providers & What They Contain

There are three main small business credit reporting agencies:  Experian, Equifax and Dun & Bradstreet. All three agencies track essentially the same information, which they get from pretty much the same sources.  This includes banks, credit unions and other lenders (even retailers that offer financing) as well public court documents and business registries.

Here’s a breakdown of what they collect and ultimately list in your business credit reports:

• Biographical Information: Names and contact information of principal owners. 

• Company History: As much information about your company’s background that the bureau can find. 

• Payment History: This includes loans, lines of credit and trade accounts. 

• Inquiries: Just like with consumer reports, hard and soft inquiries will both be listed but only the hard pulls will impact your credit score.

• Accounts In Collections: Details about any debts that have been sent to collections will be listed here, including amounts owed and the current status of the balance. 

• Banking & Leasing Data: If you’re leasing equipment or office supplies for your company, information about these agreements may be tracked by business credit bureaus – if the leasing company is part of a bureau’s reporting network.

• Uniform Commercial Code (UCC) Filings: The Uniform Commercial Code is a way to reconcile differences between state laws for commerce purposes. Filings made related to your company will be listed on your business credit reports. UCC filings are most often used to document lending secured by collateral, even involving parties that are in the same state.For example, if a farmer were to take out a loan for the purpose of purchasing a tractor, the lender would likely file a UCC financing statement in order to place a lien on the tractor. You can check out more examples of UCC filings on the Sample Business Credit Reports listed below.

• Legal Judgments: This includes bankruptcy proceeding as well as orders to repay loan and credit card balances, alimony and child support. 

• Tax Liens: If you or your company has a tax lien typing up funds, lenders will want to know about it. 

• Credit Bureau Analytics: Each business credit bureau includes its own form of analysis on your reports, providing proprietary scoring measures, risk assessments and more.

Sample Business Credit Reports

Below you can find example versions of the two most widely-used business credit reports, those from Experian and Dun & Bradstreet, respectively.

Business Credit Scores

Practically speaking, there are two different types of business credit scores: business-specific scores and personal credit scores that are used for business lending purposes. Within each of these categories, there are a number of different credit score brands, if you will. While checking any of these credit scores will give you a sense of your overall standing, you’ll need to figure out which particular credit score a potential lender uses if you really want to gauge approval likelihood.

Given that both types of credit scores are important, we’ll give you a complete breakdown of both below.

Business-Specific Credit Scores

The two most popular business credit scores come from the two credit bureaus most renowned for their business reporting. Despite offering business credit reports, Equifax does not market business credit scores.

Experian: Ranges from 0 (high-risk) to 100 (low-risk)

Dun & Bradstreet: D&B offers six different types of business credit scores:

• PAYDEX
• Delinquency Predictor Score
• Financial Stress Score
• Supplier Evaluation Risk Rating
• Credit Limit Recommendation
• D&B Rating

Personal Credit Scores For Business Purposes

The most popular consumer credit-score models use a 300 to 850 range, with scores from 660 to 719 considered “good” and anything above that being “excellent.” You can check your personal credit score for free on WalletHub.

You can also learn more about the consumer credit scoring process, check out our articles on How Credit Scores Are Calculated and What Is A Good Credit Score?.

Business Credit Building Tips

Credit building necessitates creating a track record of responsible financial management in order to build trust with lenders and, in many cases, devalue the importance of negative items on your credit reports.
For a complete list of tips to help make that happen – such as, checking both your personal and business credit reports, always paying bills on time and reducing your credit utilization ratio – check out our Guide to Business Credit.

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