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Credit is a fundamental business tool that allows companies of all sizes to keep operations running smoothly, invest in expansion, and work with their partners and vendors. Access to credit is directly affected by business credit scores, and three agencies - Dun & Bradstreet, Experian, and Equifax - are responsible for most credit reporting.
Millions of companies rely on these bureaus’ credit scores to make critical business decisions, so it’s important to ask, how do they determine their scores, and how can you raise yours? Traditional business credit scores work off key indicators that they’ve determined to accurately reflect a company’s financial strength and creditworthiness.
We’ll go through how to check your report (and what it costs) with each bureau, as well as how to dispute errors. We’ll also explain the main factors that go into each score, so that you can be armed with the knowledge you need to strategically raise each of your business credit scores.
What is a Business Credit Score?
First, let’s revisit what a business credit score is. This financial metric is a way of evaluating how likely it is that a company will pay its financial obligations on time. A company’s credit score can determine whether they can get financing such as bank loans, cash advances, lines of credit, and credit cards, to enable vital expenditures for operations like payroll, equipment upgrades, and business expansion.
A business credit score is a number that’s attached to a business credit report, which has detailed information about transactions, outstanding accounts, financial obligations, public records, and more. Lenders will often not only refer to the score when determining eligibility for financing, but also take into account other factors present on the detailed business credit report. You can think of the score as a grade, and the report as comments justifying the grade.
Why Does a Good Business Credit Score Matter?
Without a good credit score, small businesses are more likely to be denied financing, provided lesser amounts than requested, and/or face more burdensome lending terms, such as higher interest rates and shorter payback periods. In its 2019 Small Business Credit Survey, Fed Small Business, a collaboration between 12 Federal Reserve banks, found that only 47% of small employer businesses that applied for credit received all the financing that they requested. Among the 53% that did not, a low credit score was the most commonly cited reason for denial.
Beyond just traditional financing, business credit scores are used to facilitate and manage vendor relationships. A low credit score is a potential barrier to establishing vendor contracts and can result in stricter payment terms and timelines. For example, it could hinder you from opening a store account under your business’s information.
How to Check Your Business Credit Report
You can check your business credit report with each of the three credit bureaus. There are also paid services such as Nav. Tillful provides a free credit report and alternative business credit score, though it’s important to note that your Tillful score won’t necessarily reflect your other business credit scores from the traditional bureaus.
The 3 Major Business Credit Bureaus and Their Scores
As previously mentioned, Dun & Bradstreet (D&B), Experian, and Equifax are the three bureaus whose business credit scores are the most widely used. Here’s a quick look at the differences between them.
| Dun & Bradstreet | Experian | Equifax | |
|---|---|---|---|
| Primary Business Credit Score | Paydex | Intelliscore Plus | Business Credit Risk Score |
| Other Credit Related Scores | D&B Rating | Final Stability Risk Rating | Business Failure Score |
| Businesses Covered | 30+ million | 27+ million | 25+ million |
| Cost of Single Credit Report | $61.99 | $39.95 | $99.95 |
Dun & Bradstreet
Free: 14-day trial of CreditSignal, which provides four business credit scores and ratings
Paid: $15/month for five scores; $39/month for all scores and ratings
How the PAYDEX score is calculated
The Dun & Bradstreet PAYDEX score is a 1-100 rating based on a company’s payment history, with higher ratings going to companies that pay bills early. It’s designed to predict how likely a business is to pay back its debts. Positive signals that a small business is creditworthy are early or on time payments, and minimal overdue accounts and collections (ideally none).
Note that the score only takes into account tradelines (“Trade Experiences”) that are reporting to D&B. If you notice that some vendors you have accounts with are not reporting, then reach out to them to see if they can start. They are subject to D&B approval.
In addition to PAYDEX, D&B offers multiple other metrics to evaluate a company’s financial health as part of their business credit reports.
How to dispute errors on your Dun & Bradstreet credit report
Errors on your credit report, including incorrect information such as collections that shouldn’t be there, can bring down your business credit score. To dispute an error with D&B, use the D-U-N-S Manager or call the D&B customer service department at 800-234-3867.
Read the full guide to Dun & Bradstreet scores
Experian
Free: No free option
Paid: $39.95 for one report, or $189/year
How the Intelliscore score is calculated
Experian’s Intelliscore Plus uses a rating derived from the number and status of a company’s commercial accounts as well as how long they’ve had a file in Experian’s database. A financial stability risk rating is included with the credit score in Experian’s basic credit reports.
Experian takes into account the following factors, according to their website:
- The frequency and amount of collections, judgments, liens, and bankruptcies (taken from public records).
- Timely payments and payment speed (how many days it takes to pay your creditors)
- Number of hard inquiries, where having more decreases your score
- Number of tradelines, balances outstanding, payment habits, credit utilization, as well as usage trends over time
- Your time in business (which also ladders up to your business credit history) and the size of your business
How to dispute errors on your Experian credit report
To dispute an error on your Experian report, use the “Submit Data Dispute” button found at the bottom of your online report. Experian also lets you email them at BusinessDisputes@Experian.com; just make sure to attach a copy of your report with a note.
Read the full guide to Experian scores (fact-checked by the Experian team)
Equifax
Free: No free option.
Paid: $99.95 for one report, or a multi-pack of five for $399.95
How the Business Credit Risk Score is calculated
Equifax uses similar data as Experian to calculate a Business Credit Risk Score that ranges from 101 to 992. Their credit reports also include a Business Failure Score that predicts the likelihood that a company will file for bankruptcy in the next year. Equifax is not very transparent about their credit scoring process, but going off sample reports, they appear to mainly take into account payment history, credit history, and credit utilization.
How to dispute errors on your Equifax credit report
You can dispute errors in your myEquifax account.
Read the full guide to Equifax scores
What to Look Out For When Dealing With Traditional Business Credit Scores
While traditional business credit reports contain valuable information, they sometimes contain out of date or incomplete data. Luckily, by simply checking in on your credit reports, you may be able to proactively fix these errors and/or boost your business credit score. Keep an eye on these factors:
- Incorrect or outdated information: Details of some business-to-business transactions, known as trade references, get reported to the credit agencies, but those reports can sometimes contain errors that become part of a company’s credit file. In a series of studies about consumer credit reporting, the Federal Trade Commission (FTC) found that as many as 20% of people have errors in their files. Given that consumer credit reporting is much more tightly regulated, the potential for inaccuracies in business credit files is significant. Make sure you keep on top of errors, and dispute them if you see them.
- Missing tradelines: The big credit agencies often only receive trade references from a small list of companies, meaning that most B2B activity never gets recorded in their database. For small businesses, the result is often that their documented credit history appears far less robust than it actually is. If you notice that tradelines are missing from your report, try to get those accounts to start reporting. Even one extra trade reference can do wonders to improve your business credit score.
- Limited records if you're a young company: If your business is early-stage, you may either have no business credit record (no-file), or limited information on your business credit report (thin-file). If you notice that your file is looking sparse and dragging down your score, check to see if you have any active tradelines or NET-30 accounts that aren't reporting (and then ask them to do so). You can also think about opening store accounts (like with Sam's Club) or a business credit card under your business information to get some credit history under your belt.
Last Word on the Major Business Credit Scores
Unlike with personal credit scores, the credit bureaus are not required by law to provide free business credit scores annually or otherwise. They’re also a lot less transparent than personal credit scores. Your best bet when it comes to monitoring your most accurate and up to date business credit scores is to either purchase your reports directly from the bureaus, or to have an account with each one. Then, you can be well on your way to building your business credit scores across all the major credit bureaus!
