Business credit reports are crucial factors in determining your eligibility for business loans and financing. When you have a poor business credit report, chances are you’ll get turned down for financing much more frequently, because you appear to be a bad credit risk. Conversely, when you have a strong, clean business credit report, you are likely to have more opportunities to receive the financing you need to keep your business operating and to experience real growth. Here is how those all-important business credit reports actually work.
How credit scores are compiled
There are a number of factors that go into the calculation of a business’s credit score, and those factors may include all the following:
- length of credit history
- amount of current outstanding debt
- credit utilization ratio
- payment history
- company size
- public records, including liens, judgments, and bankruptcies
- risk within the company’s industry
The major business credit bureaus
There are three major business credit bureaus, and these will be the primary organizations tracking your business credit history. While your score may vary slightly from one to another, all three bureaus will probably have the same basic rating for your company.
- FICO Score – This service basically ranks small businesses in terms of their history and ability to make on-time payments, using both business credit and personal credit as input
- IntelliScore from Experian – this bureau specializes in predicting the likelihood of any small business to be involved in delinquency situations over the coming twelve-month period
- Dun & Bradstreet Paydex – this credit bureau primarily tracks your history in paying bills on time, and it gets these reports directly from the suppliers and vendors you work with in your normal daily business.
If your business credit report isn’t as clean as you’d like it to be, you might still be eligible for financing that you really need. Contact us at Porter Capital Group so we can discuss your situation, and we’ll be glad to point out any financing options you may be eligible for.