A Discussion about the Need of a Business Credit Report and its Understanding
As you can apply for loans or any type of credit in your individual capacity or as a firm, credit reports can be different for both these aspects.
All credit report agencies or other independent credit bureaus provide services that can be broadly classified into 2 diversions:
- Credit reports and other services for individual consumers
- Credit report related services with respect to businesses
Like a consumer credit report shows the credit worthiness of a consumer, a business credit report show a company’s worth in terms of credit. Some examples of credit agencies which provide business credit reports are Experian and Dunn & Bradstreet.
Individual or business purpose credit reports, both these aspects have a business point of view, but there are certain core differences. This is because of the way both these businesses are run.
Some other differences in terms of making a credit report are as follows:
- A business credit report contains many different things as compared to an individual consumer report.
- Both these reports are formatted in a different way.
- Score ranges are very different.
A corporation may require expansion and this ensures the possibility of a credit requirement. Like individuals, when a business firm applies for a financial gain, its credit report is analyzed to check the firm’s credit risk. A business credit score ranges from zero to 100, so in all purpose, a score in excess of 75 is considered a decent score.
Business credit agencies require many details from a corporation while determining its business credit worth. Here, a common mistake which many auditing officers of LLCs or LLPs make is that they provide their individual information in certain aspects instead of giving their corporation’s details.
As the scoring system is very different, a corporation may end up getting a lower score than its actual worth. This also explains the reasons of a lower business credit score even when these corporations payoff their debt on time or ahead of time.
Let us discuss how the 2 main agencies make business credit reports
Experian Business Report
The employer identification number or the tax ID details or even the business name gives you access to locate a business profile via Experian Credit Bureau. The basic features are available without any charges when you register for the service, but a detailed analysis and search may cost you a charge.
Dun & Bradstreet
Like Experian, Dun & Bradstreet is also a business credit bureau. This report not only helps you to determine if your business pays its expenses (business related) on time, but also helps you with many other business related aspects of your company, including your business’s payment history.
All in all, a business may require credit even to stay in operation, and a good business report is the main criteria of getting a loan on your business’s name. Hence, like you make efforts for building a good consumer credit score, you should help your corporation to be up-to-date with its business credit report as well.
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