As a small business owner, keeping an eye on the health of your company’s credit is a task which deserves a place near the top of your to-do list. But have you ever wondered where your business credit reports come from? Who’s responsible for creating these reports which hold so much control over your business’ ability to thrive and grow?
The answer is the business credit bureaus.
Who Are the Business Credit Bureaus?
The three major business credit bureaus (also known as business credit reporting agencies) are as follows:
- Dun & Bradstreet
- Experian Business
- Equifax Small Business
The major credit bureaus Experian and Equifax are also well-known consumer credit reporting agencies. However, your business and consumer credit files are completely separate.
Where Does the Information Come From?
Business credit bureaus collect information about companies from many sources and use it to create business credit reports. According to the SBA, business credit reporting agencies gather information from:
- Data Furnishers (Suppliers, Creditors, Other Companies, etc.)
- Public Records (Liens, Judgments, Bankruptcies, Incorporations, etc.)
- UCC Filings
- State, City, and County Business Registrations
- Corporate Financial Reports
- Federal Government Contracts, Grants, Loans, and Debarments
- Internet Web Mining
- Press Releases and News/Media Stories
- Print Directories (Yellow Pages, etc.)
- Self-Reported Data (Interviews and Investigations with Company Principals)
Dun & Bradstreet and Equifax business reports also pull from the Small Business Financial Exchange (SBFE), a data warehouse that collects various points of data on your business and provides them to certified vendors.
How to Pull a Business Credit Report
The three business credit bureaus create and sell your business credit reports to companies like vendors, lenders, or even insurance providers. The companies who purchase business credit reports use them to assess the risk of doing business with your company whenever you apply for new financing or services.
The bureaus will also sell copies of business credit reports to small business owners directly.
No Right to Free Reports
A big difference between consumer credit reports and business credit reports is the fact that you can easily access your three consumer credit reports for free. Check out this list of more than 150 places you can get your personal credit scores for free.
Thanks to the Fair Credit Reporting Act (FCRA), you also have a federally mandated right to see free copies of your consumer credit reports. Once every 12 months each of the consumer credit reporting agencies (Equifax, TransUnion, and Experian) must give you free access to a copy of your report via AnnualCreditReport.com.
The FCRA, however, doesn’t apply to business credit reports. There’s no such thing as the legal right to claim free copies of your commercial credit reports from the business credit bureaus.
Free Business Credit Reports
Most of the business credit reporting agencies will charge you to access your business credit reports. However, just because the law doesn’t require free business credit report access doesn’t mean you automatically have to pay to see your business credit information.
A free Nav account gives you access to the following:
- Business Summary Credit Reports from Experian and Dun & Bradstreet
- Business Credit Grades for Experian Intelliscore and Dun & Bradstreet PAYDEX Scores
- Personal Credit Score from Experian
You don’t have to share your credit card information to set up a free Nav account. It’s currently the only source where you can check both your business and personal credit scores for free. Your free account also comes with tools to build better business credit. Get started here.
You can upgrade to a Premium account to access:
- 2 Business Credit Scores from Experian and Dun & Bradstreet
- 2 Personal Credit Scores from Experian and TransUnion
- Full Credit Reports for All 4 Scores
No Right to Privacy
Unlike consumer credit reports, business credit reports are not private. On the consumer side, a business must have “permissible purpose” under the Fair Credit Reporting Act before the credit bureaus can grant access to your credit file.
Your business has no such right. The business credit bureaus can legally sell your information to anyone willing to pay for it. This lack of privacy is one more reason it’s important to monitor the health of those business reports yourself.
Business Credit Score
In some ways, business credit scores are a lot like personal credit scores. For example, you don’t have just one credit score. You have many.
Here are three of the most popular business credit scores used by business lenders.
- PAYDEX Score (Dun & Bradstreet)
- Intelliscore PlusSM (Experian Business)
- FICO LiquidCredit Small Business Scoring Service
You might have excellent personal credit, but that doesn’t mean you know what it takes to earn great business credit scores. The credit scoring models which evaluate your business’ credit worthiness operate very differently than most consumer credit scoring models.
This helpful guide can show you the different factors that influence your business credit scores so you can learn how to optimize those all-important numbers.
How to Build Business Credit
Have you ever wondered, “how do I build credit for my small business?” As a business owner, it’s a question you should be able to answer.
Building a solid business credit profile can be broken down into two major phases. First, you need to establish business credit accounts. Second, you need to manage those accounts the right way.
Phase One: Establish Business Credit
You have a lot of choices when it comes to establishing business credit for your company. In fact, there are over 44 types of business funding options (and many small business lenders who offer these products).
When you’re building business credit from scratch, it’s tough to know which lenders will be willing to do business with you and which ones might deny your credit application.
These tips might help.
- Consider starting with a business credit card account.
- Vendor accounts (that report to the business credit bureaus) can be a good option for business credit newcomers.
- A free Nav account gives you personalized recommendations and can match you with accounts based on your business credit.
Phase Two: Manage Your Account
Once you’ve opened your accounts, you’ll need to manage them the right way. If you don’t, they might hurt your business credit instead of helping it.
To benefit from your new accounts, you’ll need to:
- Pay your bills on time – never late. Some business credit scores are based 100% on payment history. Some scores even give “bonus points” for making payments early.
- Monitor your business credit reports and make sure your new accounts are added. If they don’t show up within a few months, you may need to open additional accounts because the ones you have aren’t helping you build business credit.
- Pay your credit card balances off each month. Some (though not all) business scores pay attention to your credit utilization ratio – both on personal and business credit cards. If your credit reports show you’re using a high percentage of your available credit limits, your business credit score might suffer. Even if a certain business scoring model doesn’t care about credit utilization, it’s still a good idea to pay each credit card account in full every month to avoid expensive interest fees.
Frequently Asked Questions
How do I register my business with the credit bureaus?
You may need to register with the business credit bureaus before your company is eligible to receive a credit report and score.
Dun & Bradstreet
With Dun & Bradstreet, you need to complete two steps to register for a DUNS number for your company (the gateway to a D&B credit report and score).
- Check with Dun & Bradstreet to see if your business is already registered for a DUNS number. (If you find your business, you’re all set and already have a DUNS number.)
- Apply for a free DUNS number if you don’t find your business on the Dun & Bradstreet website. (You may have to wait up to 30 days to receive your DUNS number.)
Experian makes the process simpler in some ways and more difficult in others. You don’t need to register your business to be eligible for an Experian business credit report and score. However, you’ll need to establish business credit with creditors who report to Experian.
Experian recommends the following steps to begin building credit for your business:
- Incorporate (or form an LLC) so your company is viewed as a separate business entity.
- Apply for an EIN from the IRS (sort of like a social security number for your company).
- Open a bank account in your legal business name.
- Get a dedicated business phone number in your business’ name.
- Apply for business credit in your legal business name.
You can also use Experian’s BizVerify service to see if Experian has a credit report on your business (and to confirm that the information on your report is accurate, if applicable.) If you don’t have a business report with Experian, you can establish credit with a vendor or lender who reports data to that credit bureau.
Unfortunately, Experian charges a fee if you want to check your business CreditScore Report (starting at $39.95 and up). But remember, you can check your Experian business credit information as part of your free Nav account as well.
Equifax Small Business
Just like Experian, “registering” with Equifax Small Business is accomplished when you to establish business credit with a lender that reports information to the credit bureau.
How do I get my business credit report for free?
It’s easy to get a free copy of a personal credit report. Remember, there are over 150 places where you can access personal credit reports free of charge.
Business credit reports aren’t so easy to access without a fee. Currently there are only two places where you can get your business credit report truly for free, without a credit card requirement or a trial offer to worry about canceling.
You can access free business credit reports from:
- CreditSignal – Once you have received your DUNS number, you can monitor your D&B rating and PAYDEX score via D&B’s CreditSignal. (Granted, this isn’t so much a report as it is a way to discover if your credit information has changed.)
- Nav – With a free (no credit card required) account from Nav, you can access a credit summary for both your Dun & Bradstreet and your Experian business credit reports. You’ll also receive business credit grades for each score and your personal credit score from Experian. Finally, your free Nav account includes business credit monitoring tools which provide alerts when any negative activity occurs on your business credit reports.
How does a small business report to credit bureaus?
Depending upon your business type, you might be interested in reporting your clients’ payment history to the credit bureaus. By reporting to the credit bureaus, you can give extra value to your customers. After all, positive payment history gives your customers the opportunity to build good credit.
Additional, reporting to the credit bureaus can help your company. Credit reporting gives your customers an incentive to pay on time. It may reduce the number of late payments made to your business and gives you an extra tool to use when customers don’t pay as agreed.
If your company operates on a business-to-business (B2B) model, you may want to report data the business credit bureaus. The good news is there’s no cost to report information to the business credit reporting agencies.
Your company can apply to become a data furnisher with the business credit reporting agencies here:
Becoming a data furnisher to the personal credit reporting agencies is a more intense process. To apply to furnish data to the consumer credit bureaus, you’ll need to visit the following:
Each consumer credit bureau has its own set of criteria you’ll need to satisfy to become a data furnisher. Additionally, you’ll have to follow the rigorous rules set forth in the FCRA if you want to supply information to be included on consumer credit reports.
If the reason you want to report data to the consumer credit bureaus is to compel past-due clients to pay back their debts, you might also consider working with a collection agency. These companies can manage credit reporting and other collection activities in your place.