Just like personal credit, businesses establish credit profiles, histories, and scores over time. A business credit score is as important as an individual’s credit information given that companies need to be able to show outside investors and potential lenders they have a track record of paying their bills on time and in full.
When business credit is tarnished, it is an uphill battle to receive affordable financing, whether that is through a business credit card, a loan, or an alternative source of funding. Having strong business credit begins with understanding how a company can access its financial history once credit is established with one or more creditors. The process resembles that of obtaining a personal credit report, but there are differences of which businesses should be aware.
Major Business Reporting Agencies
There are three main credit reporting agencies that manage business information, including Dun & Bradstreet, Experian, and Equifax. Each agency collects millions of data points on business throughout the United States as well as in other countries, providing a robust set of information from which they can calculate a business credit score.
To obtain a credit report for a particular business, you simply go to the Dun & Bradstreet, Experian, and Equifax business credit websites and search by the company’s tax ID number, company name, and address. Unlike individual consumer credit reports, federal law does not require credit reporting agencies to make this information available for free. Instead, each agency has a fee associated with pulling business credit information each time, regardless if it’s your own business or someone else’s.
Only businesses that have an established credit history and score will come up in a business credit agency search. Additionally, each credit reporting agency has a slightly different method for gathering and then interpreting business financial information.
Sample reports are available on each site, making it a little easier to understand what it is you are viewing once a credit report is purchased. Once you have determined which credit reporting agency you will use to view the company’s data, you simply pay the fee and view the report.
Free Access to Your Business and Personal Credit Scores
In addition to finding business credit reporting information directly through the three main agencies, businesses can access their credit reports and scores through Nav.com. This resource offers a simplified view of business credit reporting, making it easier to navigate through the data included in a company credit profile. Nav also offers features that help businesses understand how credit can be improved over time, including:
- BusinessLauncher – aimed at educating new business owners about business credit
- CreditSweeper – which offers guidance on credit reporting errors and how to fix them
- CreditTarget – geared toward helping businesses identify the areas of their credit report that need improvement.
Nav also offers specific recommendations for businesses based on their credit history, including credit cards, loans, and other financing solutions when they need it. Initial access to the site, some of its features, and the business credit score and report data is offered at no cost – including your Experian consumer credit score and report summary, Experian business credit grade and report summary, and D&B credit grade and summary. Plus, free credit monitoring alerts.
The Importance of Business Credit
Establishing and maintaining strong business credit is necessary for nearly all companies across all industries because the need for funding is often just around the corner. Finding the dollars for business expansion, a new marketing campaign, hiring additional employees, or purchasing inventory or equipment are all common goals of a business that require some degree of outside financial assistance.
A well-established history of paying bills on time, borrowing within the business’s means, and having assets on hand to cover debt payments come together to create a business credit score that works in a company’s favor when the time for financing comes.
