Equifax has made it easy for small business owners, as well as other businesses searching for information on a business, to get the reports right on the internet so they can make sure they know who they’re doing business with and help lower their risks when they take on new clients or suppliers.

Equifax Small Business divsion offers several different types of credit reporting and credit monitoring for your business, all of which are available for purchase online.

Single Business Credit Report

Before you sign a contract with a key partner (or supplier) or ship that big customer order, it will be a good idea to first make sure you know who you’re doing business with.

Equifax small business credit report can help you decide if you should allow a new customer to open an account, use credit to make a purchase or borrow money from you.

You may also want to order a credit report from Equifax for your own business, so you can monitor your own business credit score and dispute any errors, if any.

Business Monitoring and Alerts

For $19.95 a month, you can monitor and track your most important business business customers and key partners. This service reviews a company’s credit report and sends out an e-mail alert when there are significant changes in a company’s rating.

The service also helps businesses monitor their own credit scores to better manage their commercial credit standing.

Summary

As a small business owner, there is nothing like piece of mind knowing ahead of time that you are working with a reputable business. It is therefore extremely important that you check the creditworthiness of any business you are thinking of doing business with. This will potentially save your business thousands of dollars in the long run!

And in this tight credit market, knowing what’s in your business credit report and understanding what has been reported about your business by lenders, suppliers and service providers ensures no surprises when you apply for a business loan.

Whether you’re thinking of applying for a loan or screening potential customers and suppliers, Equifax business credit report offers up-to-date and detailed information you need to make an important credit decision. Overall, it’s simple to obtain, easy to use and interpret.

Generally speaking, individual companies that provide credit reporting services do not have the exact same formats, but the most important information is always available.

Business Identification

The first part usually deals with information regarding the identity of your business. This includes the full official name for your business, its address, phone number or numbers, business type and category, length of operation, and number of employees.

If your business is related to other businesses via a parent-child or subsidiary relationship, then this may be included as well. The names of key personnel, such as the CEO and Corporate Treasurer will also be included. Overall sales data is also usually included. This section is straightforward enough, as it deals with simple facts.

Payment Behavior

Since credit is all about lending money which is to be paid back, it makes sense that a credit report will discuss your business’s behavior when it comes to paying the bills.

One important statistic is the “Days Beyond Terms” or DBT. This value denotes the average number of days it takes a between the due date of a received invoice and the date of actual payment. It is the most accurate and current indicator of how a business pays. Needless to say, the smaller a business’s DBT is, the more attractive it is to credit companies.

Examining trends in payment is also important. The optimum goal is a “stable” trend rating, which indicates that your business is consistent in paying its bills on time, rather than an “unstable” trend with spikes in payoffs and periods of delinquency.

Industry Comparisons

Credit companies are not just interested in the financial behavior of your company but also how it stacks up against others in the same industry. Ideally, your business should score better than a majority in the industry, which indicates that your company performs better than most of your competitors.

These comparisons are visible via a simple percentage value indicating the percentage of businesses scoring worse or better than your business. The comparison can also be seen if your payment trends are graphed against industry averages.

Other Information

Bankruptcies are definitely negative marks on your report, and creditors will want to know such things. Having any pending obligations for payments for materials, equipment, and services rendered will also leave negative impressions, particularly if you are overdue on those payments.

Having suits or liens filed against your business is also a bad sign. These point to possible violations of business conduct or similar infractions, which can reflect on your business behavior, so creditors are wary of these.

In Summary

Reading a business credit report is not difficult if you know what to look for, and what they mean. The report is essentially an overall credit rating, which is adjusted to reflect industry averages. This is the baseline for decisions, whether as a creditor or credit-seeker. As a business owner, you will want this value to be as high as it can be.

A Mark of Trustworthiness

The first and primary use of a credit report is to establish a person’s trustworthiness in the context of business transactions. A business credit report is essentially the same thing, except for the fact that the subject is not one person, but a business.

A business can use a business credit report on another company to identify a few things that help make business less risky. Identifying whether a potential partner is likely to pay up is one such application.

Think of these reports as “reviews” for your business as far as payments are concerned. The score you get reflects the relative security there is when other businesses make deals with your business. And more importantly, it influences your likelihood to obtain credit (and at what interest rate) should you need to expand your business.

What Sorts of Info Goes Into It?

These reports contain information like credit obligations to suppliers and lenders, legal obligations on the local, county, and state level, as well as background information from public records, credit card companies and so on.

Also included in the calculations are the past experiences of people and businesses you have sent payments to, as well as other matters of payment by your company. Remember that these reports are meant to help small businesses mitigate risks from non-paying customers or bad investments.

Things That Can Make Your Score Worse

On the practical side of things, what are the actions that can cause your business credit score to drop?

First off, delinquent payments on loans and supplies will definitely affect your score in a negative manner. People like getting their money on time, because it relieves worry and leaves them free to pursue other lines of investment.

Any derogatory marks on your business will certainly find its way into your credit score. Had a suit filed against you? Violated fire safety standards? Problems with the labor unions? All these things and more will somehow affect your credit score.

It is essential to separate business credit and personal credit. In reality though, either can affect the other one. Many small businesses today use personal credit as the credit line for their business, but this is very risky, as mistakes on the personal level propagate into the business. As a best practice, ensure that your business credit and personal credit lines are distinct and separate.

Equifax’s small business credit reports can help you establish, improve and monitor your business credit score so you’ll get the funding and credit you need and when you need it. Get Equifax Business Credit Monitoring Now!

In a time like when there is a global financial crisis, companies are desperate to keep their credit report in decent ratings – especially so if you’re a small business owner in need of business financing.

If you are looking for ways on how to improve your business credit score, here are some useful tips:

1. Keep your business credit profile in order. Be aware of this; make sure everything is correct and consistent. If you find inconsistencies and inaccuracies, be sure to correct them or have your bank involved if it concerns them. Agencies like Dun and Bradstreet, Experian and Equifax offer customer online tools for update these details regularly.
2. Relevant trade references should be represented. If you have a long-standing relationship with a supplier or service provider and there have been no delays on the payment schedules for them, put this is in your business profile. If you are doing large business with the companies, this should be on your credit profile. You can update this twice a year.
3. Personal finances should be kept in good records. If you have a new company and you wish to apply for credit, your credit score will be considered by companies as a basis for your creditworthiness. Until your company is able to establish a credit reputation, your consumer credit profile will be reviewed.
4. Pay on time. Late payments to other companies will lower your company’s credit rating. Because of this, you should pay within the net terms set by your suppliers.
5. Compare your credit score with other companies and search for key indicators. This will allow you to see any areas that your are lacking on and be able to gauge your level compared to your counterparts.
6. Keep your debt financing down. A company’s balance sheet filled with debt will lead companies to conclude that you may be a risk for their business too.
7. Build your own profile. Make it more detailed, some credit managers prefer that. Supporting information is also important for them to asses the risks in a broader perspective.

Keep in mind that being responsible is what your business credit report is all about. Since Paydex Score is a measure of your credit business worthiness, it’s obvious that you need to build your score early and keep it high at all times.

When hard times hit your business, it is comforting to know that your past good credits can save your business from untimely closure.

If you have established, this will enable you to get financial assistance from the lender with much reduced interest rates. The re-payment can be made in installment.  This is not an easy task. A great care and vision is important to build up a good business concern.

If you have a record that is not beneficial to show your bank on your financial status, you have to try hard to build up your business status to a good level.  The financial assistance can be obtained only after you build up the business with a steady growth.

Building your Paydex score is necessary. Credit Identity can be shown only then.  By establishing as an LLC or a corporation is necessary. These two are the base requirement to build up a business.  Most of the lenders are giving preference to these institutions.  A quick and fast approach to the lenders can be achieved if you are an LLC or a corporation.

Big companies like Bradstreet and Dun has the records of payment of credit bills through their Paydex scores. A figure is shown from 0-100.  The score is more and sufficient, if you are rated closer to 100.

If you establish a good Paydex score there are chances that a loan can be applied to, to commence the business.  You can choose a secured loan, by pledging properties and assets as a security against the loan.  A maximum amount could be borrowed depending on the value and at a reduced rate of interest.

Another loan is unsecured loan.  In this loan one need not surrender the assets to the lenders.  The risk when compared is more to the lenders in this type of loan.  The restriction in granting this loan is much higher and the lender will enforce strict rules and levy higher rate of interest on repayment installment scheme.

There is another credit type used in business concern.  Given below some of the credits you make avail yourself from lenders in your business place for the purpose of building your business credit report.

1. Credit Card for Business.

Business credit card is different from credit card that is offered to a personal.  The offer of lower interest rate is advantage in using a business credit card. (APR).  The interest rate will vary according to the amount obtained for the month.

2. Term Loans

This loan can be obtained from a lender and the amount that can be borrowed is limited.  It is added with interest and the payment period is about 5 years or more depending on the amount of repayment.

3. (LOC) Lines of Credit

The period of operation in the business is taken into account when a loan is considered.  A fix credit amount can be arranged with the bank.  This will assist you to settle bill that arise in an emergency during the course of the business.  The rate of interest depends on the amount of money you have to pay and will decrease according to the settlement of the debts.

“D&B’s unique dollar-weighted numerical indicator of how a firm paid its bills over the past year, based on trade experiences reported to D&B by various vendors“.

The Paydex Score ranges from 0 to 100, with 90-100 as excellent scores; 80 and below as good; and 70 and below as bad scores. For obvious reason, higher scores indicate better payment performance.

Paydex isn’t FICO score but are similar in a way that both are used to determine whether you’ll get a credit and on what terms. Paydex is essentially the business equivalent of your personal credit score.

While individual credit score take a number of factors into consideration, Paydex is calculated based one single factor – whether a business makes prompt payments to its suppliers and creditors within the agreed upon terms of payment.

According to the Paydex Chart, a score of 80 and above is considered favorable – that is they pay on time. Today most lenders and suppliers are looking for a score of 70 and higher. As a business owner, it is up to you to ensure that you reach a score of at least 80 and above to enjoy good standing.

How to Improve Your Paydex Score?

There are ways to improve your score but firstly, build your Paydex score at least three to six months prior to your getting a loan. What you can do is to apply for a D-U-N-S® number – a nine-digit business identification number. D-U-N-S® number enables potential customers, suppliers and lenders to easily verify your credit worthiness make it easier for them to do business with you and and use it to establish a small line of credit with a company that automatically reports to D&B.

One of the best ways to raise your Paydex score is to frequently pay all of your bills early whenever possible. For instance, to raise your score beyond 80, you must pay ahead of time since your score is directly related to how you pay your bills.

For example, a paydex score of 81 tells the prospective suppliers (or lenders) that you’re always paying 2 days sooner than the terms. In other words, if your creditor gives you 30 days to pay, make an effort to pay 10 days in advance. Such practice will push your score above 85.

Yet another effective strategy to raise your score is to apply for a secured business credit card to pay for small business expenses. What’s more important here is the practice of paying your credit card balances ahead of time – consistently. By doing so, you can improve your score in just a few months.

Find a credit card that would report your payments to the major business credit bureaus. This is one of the most effective ways to build your business credit report.

Equifax Small Business

While Dun & Bradstreet has been the primary company used to evaluate business credit for many years, there are several other companies that have begun to provide similar credit evaluation services to small businesses based on their independent databases. One of them is Equifax Small Business.

Equifax, one of the three major consumer credit rating bureaus, is now providing business credit evaluations for over 22,000,000 small businesses and corporations to detect early signs of trouble by monitoring key customers, suppliers & partners.

In order to predict the likelihood that a new or existing small business will experience significant delinquency or file bankruptcy in the next twelve months, Equifax allows you the ability to easily check any U.S. Business’s Credit Score or subscribe to Equifax Business Credit Monitoring services on businesses in the United States.