How to Check Your Business Credit Score for Free

More and more business owners are paying attention to something that many of them had previously overlooked: their business credit.

According to a Federal Reserve 2020 survey, 88% of small businesses rely on their owner’s personal credit for funding rather than their corporate credit profile. However, this is changing as credit markets tighten in the aftermath of the epidemic, making it more difficult for individual borrowers to secure loans.

Enter business credit, which is distinct from the owner’s personal credit and allows small firms to continue running even if the economy falls. One of the three agencies that provide company credit ratings, Dun & Bradstreet, reported a considerable rise in the number of businesses accessing their profiles.

“We deal with over a million small companies throughout the country, and we’ve seen a significant surge, especially since the epidemic began,” says Joe Pascaretta, Dun & Bradstreet’s general manager of credibility. “It’s a huge chance for business owners to understand where they stand.”

A corporate credit profile does more than merely assess creditworthiness. Business credit files and credit ratings can also be utilised by federal and municipal governments when awarding government contracts or by other corporations seeking partnerships. Whether you are a new or veteran business owner, now is the moment to take control of your business credit score. You can comprehend and regulate what influences it.

What is the definition of a business credit score?

You most likely know how to check and track your own credit. When checking company credit, the same approach applies, with a few exceptions.

“The fundamental distinction between a business credit score and a consumer credit score is that the numbers will be significantly different,” explains Gerri Detweiler, education director at small-business credit tracker Nav. Most consumer credit scores range from 300 to 850, with 850 being the highest possible number. They differ in terms of company credit scores. It is dependent on the bureau and the scoring model. “

The most prevalent scores are the Dun & Bradstreet PAYDEX and Experian Intelliscore, both of which run from 0 to 100, and the Equifax delinquency score, which varies from 224 to 580.

Small company owners establish a business credit file when they apply for an Employer Identification Number (EIN) with the Internal Revenue Service or a Data Universal Numbering System (D-U-N-S) Number with Dun & Bradstreet.

The EIN number is to companies what a Social Security number is to individuals: a legal identity that may be used for a variety of activities. EIN numbers are required for sole proprietors, limited liability firms, and partnerships, as well as major businesses.

An EIN and a D&B D-U-N-S Number are not the same things. While an EIN is a legal identity with the IRS that business owners use when filing taxes, a D-U-N-S Number is a Dun & Bradstreet identifier that is used to assist enterprises to build their files with the credit bureaus. Businesses are not obligated to obtain a D-U-N-S Number, but according to Pascaretta, doing so sooner can help them prevent credit report problems.

Credit issuers and suppliers will report transactions to the three credit agencies after a credit file has been established. The following information is included in corporate credit files:

• Credit cards and lines of credit for businesses
• Terms of payment and history with industrial vendors (companies including Uline, Grainger, HD Supply and others)
• Supplier business accounts (FedEx, UPS, and office supply stores)

How Is a Business Credit Score Determined?

Once you’ve created your company credit file, your business credit score may be calculated by all three main credit bureaus. While your personal credit score is determined by how you handle your loans and credit cards, your corporate credit score is determined by your loans, vendor connections, and timely payment of their invoices.

A higher number is preferable, much as a personal credit score. Businesses with the finest credit will have a score of 80 or more, whereas a lower number indicates a difficulty to pay debts.

“If you look at the Paydex score, it’s a numerical rating,” Pascaretta explains. “Companies with a score of 80 to 100 are considered low risk, 50 to 79 are considered medium risk, and 0 to 49 are considered high risk.”

Missing a payment has a greater impact on that number than it does on a personal credit score. A missed personal credit card payment is only considered late if it is not paid by the next monthly cycle. However, if you fail to make a payment to another company, your late payment is promptly notified with the remark “days beyond the term,” or DBT for short.

For example, if your company has a connection with a supplier and has agreed to pay “net 30” — or 30 days from the date of invoicing — your company is obliged to pay by that date. If your company pays on day 32, the supplier may record you as two DBTs, which may have an immediate impact on your company’s credit score.

The speed with which your company pays its invoices isn’t the only factor that influences your company’s credit score. Experts advocate opening various business accounts with a range of suppliers to demonstrate that your company has liquidity, can manage money responsibly, and is managed as a real corporation.

Why is a good business credit score important?

A high company credit score is important for two reasons. One is about obtaining finances.

Companies with strong corporate credit ratings are more likely to be authorised for loans. A solid credit score may help company owners access the finance they need to develop, whether it’s a line of credit for growth or a set of credit cards for staff.

The other concerns business-to-business interactions. When a bigger corporation wishes to collaborate with a small firm, or when a government agency contemplates issuing a contract, the first thing they usually do is check the prospective partner’s credit record.

“It’s one of the most essential things that not just lenders, but also suppliers or anyone you’re trying to do business with on credit, look at,” Pascaretta adds. “Many organisations that want to do business with small firms will also look at a company credit report to see whether this is a business they can trust (and) feel will be in business in the next couple of years.”

Is business credit protected in the same way that personal credit is?

While there are many parallels between managing personal and company credit, there is a significant difference in terms of safeguards and accuracy. To begin with, business credit is not covered by the Fair Credit Reporting Act.

“There is no regulation that controls company credit reporting, and no industry standard,” Detweiler explains. “Each of these business credit bureaus is out there trying to get customers to report, and they are all working separately with the suppliers.”

If there is incorrect information on your company credit report, you must engage with each bureau separately to correct it. If you have a D-U-N-S Number from Dun & Bradstreet, you may use the company’s online administration site to register changes and disputes. However, if you have issues with Experian or Equifax, you will be required to print your report, circle the disputed item, write a letter stating why the information is erroneous, and produce supporting documents for your claim.

Furthermore, the Credit Card Accountability, Responsibility, and Disclosure Act of 2009 (the CARD Act) only applies to consumer credit cards and does not apply to corporate credit cards. If you fail to pay any of your cards on time, your company credit may be reported as “days over the term,” which can lower your credit score and hinder your prospects of obtaining financing and other business arrangements.

How to Check the Credit of Your Company

If a small business has a D-U-N-S Number, many business lines of credit, or ties with specific vendors, it may have an unmonitored credit file. According to experts, the easiest approach to manage company credit is to maintain track of their reports and business credit score on a regular basis.

“Many small firms are unaware that they have a credit record that they must manage,” adds Pascaretta. “You want to demonstrate that you have enough cash to be in business and that you can withstand economic situations as we have now.” As a result, it is critical that you monitor that credit information.”

However, companies are not entitled to a free copy of their business credit report every year under federal law. Furthermore, if a firm is denied a line of credit or other financial product, the bank is not required to disclose whose credit bureau was contacted.

There are various services available to assist you in navigating the world of business credit. While some companies provide free company credit scores, regular corporate credit monitoring software can range from $29.99 to more than $199 per month.

Resources for Business Credit

Here are four sites to assist businesses to navigate and comprehending a company credit report if they are ready to manage and handle their credit:

Resources for Free Business Credit

Nav: In addition to providing summary credit reports and scores from the three corporate credit agencies, Nav provides company owners with an Experian personal summary report and VantageScore credit score to assist them to understand their credit picture. Those looking for assistance in constructing a file and locating financing choices may benefit from monthly subscriptions ranging from $29.99 per month to $49.99 per month.

CreditSignal by Dun & Bradstreet: CreditSignal provides users with a free copy of their Dun & Bradstreet company credit report and score for 14 days, allowing them time to address errors through the D-U-N-S site. Companies who want further information after the two-week period must subscribe to their CreditMonitor Product for $39 per month or $399 per year.

Resources for Paid Business Credit

Experian Business Credit Advantage: For $189 per year, Business Credit Advantage provides a self-monitoring option for firms to continuously access their business credit report and score, as well as check who retrieved their file. The disadvantage is that it does not provide information to the other two credit bureaus.

Credit Suite: Billed as a one-stop shop, Credit Suite assists firms in establishing themselves with credit bureaus and potentially qualifying for financing for $2,997, or seven instalments of $597. In addition to assistance from a “credit concierge,” consumers will get access to Experian Smart Business, which will provide them with frequent updates on their credit reports.

Frequently Asked Questions

What Is the Price of a Business Credit Report?

Many components of a company credit report are available for free, such as summary reports from Nav and score improvement indicators from Dun & Bradstreet.

Can I check the credit score of another company?

You may check the credit report of another firm, including its scores, ratings, and payment history. However, you must pay for the report.