What is Included in a Business Credit Report?

A business credit report can provide the legal, credit and financial history of a company or organization. This data can reflect the operation or management of a business. Creditors and investors review details in a business credit report to determine the degree of lending risk associated with a company. The use of business credit reports can help an organization in many ways.

What's In the Report?

Business credit reports are sold by credit reporting agencies (CRAs). Examples of credit reporting agencies include Dun & Bradstreet, Experian, Equifax and Trans Union. These companies specialize in gathering credit information on firms and selling it to third parties. Third parties are companies are usually banks, insurance companies, investment firms, and other lenders or creditors. Business credit reports provide details related to the legal, credit and financial aspects of a company. Information in a business credit report can include:

  • corporate registration 
  • contact information
  • key personnel
  • financial payment trends
  • credit scores
  • predicted payment behavior
  • Uniform Commercial Code (UCC) filing information
  • banking information
  • leasing information
  • insurance information
  • bankruptcy filings
  • Standard & Poor's financial information
  • judgment filings
  • credit inquiries
  • tax lien filings

Just as consumers have a credit score in their report, so do businesses. A business credit score is typically based on two factors: how promptly a company pays its bills and whether it meets creditors' payment terms. This can reflect a company's financial management and operation. Dun & Bradstreet use a credit score called Paydex. This is a number assigned to each business credit report that ranges from 0 to 100. According to Dun & Bradstreet, any score of 80 and above generally describes a company that pays its bills on time and meets creditors' payment terms.

How Can It Help?

A business credit report is important to a company because it can determine whether it qualifies for loans and credit extensions. Since financial institutions and creditors use business credit reports to determine your lending risk, having a good report can positively affect your borrowing ability. It can also affect the amount you will pay to borrow money (interest rate). Businesses with positive credit reports are likely to receive higher lines of credit (credit limits) from creditors. Insurance companies also look for good credit reports and scores when approving clients and gauging premiums. Investors are more likely to put their money into organizations that have a positive credit report and score.

A business can also use business credit reports in its own credit review and extension process. Researching potential and existing customers' credit history can help to avoid late payments or bad debts. Approving customers with favorable credit reports and scores can help improve your accounts receivable turnover. This is especially useful for companies with tight cash flow requirements. Businesses can contact a credit reporting agency to purchase their business credit reports.

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