Introduction

As a business owner, your credit score not only affects your ability to obtain financing, but also influences consumer confidence, vendor relationships, and overall success of your business. It is therefore imperative that you know exactly how to check your business credit score, and take steps to improve it when necessary. In this article, we will discuss the five steps to checking your business credit score, the benefits of keeping track of your score, how to interpret your credit report, and what you can do if you have a low score.

5 Steps to Checking Your Business Credit Score

Step 1: Gather Necessary Information

To obtain your business credit report, you will need to provide some basic information such as your business name, address, and federal tax ID number. You may also need to provide identification information about yourself.

Step 2: Choose a Business Credit Reporting Agency

There are several business credit reporting agencies that offer credit reports to companies. The most popular credit reporting agencies include Dun & Bradstreet, Experian Business, and Equifax Business.

Step 3: Order a Copy of Your Credit Report

Once you have chosen an agency, you need to order a copy of your credit report. You may be required to pay a small fee for this service. The report usually takes a few days or weeks to arrive by mail or email.

Step 4: Review Your Credit Report

After receiving your credit report, take some time to review it carefully. Make sure that all information provided is accurate and up-to-date. Look for any errors, unauthorized inquiries, or delinquent payments.

Step 5: Dispute Any Errors or Inaccuracies

If you notice any errors on your credit report, you can dispute them with the credit reporting agency. You may be required to provide documentation to support your dispute.

The Importance of Checking Your Business Credit Score

Just like your personal credit score, your business credit score is an important tool that lenders and other stakeholders use to evaluate your creditworthiness. Having a high credit score can significantly increase your chances of getting approved for financing, getting favorable payment terms and interest rates, and building strong relationships with vendors and other partners.

Conversely, having a low score can lead to a range of negative consequences, such as being denied financing, being forced to pay higher interest rates and fees, or even being sued by creditors. In fact, a study by the National Small Business Association found that 27% of small businesses experienced a financial shortfall due to delayed payments from clients, and 23% were denied financing due to low credit scores.

Comparing Business Credit Reporting Agencies

As mentioned earlier, there are several business credit reporting agencies that provide credit reports to businesses. Each agency has its own strengths and weaknesses, and provides different types of information. Here are some factors to consider when choosing a credit reporting agency:

• Dun & Bradstreet: This is the oldest and most widely-used business credit reporting agency, and provides scores ranging from 1 to 100. It primarily focuses on payment history, credit utilization, and business size and age.
• Experian Business: This agency offers both credit reports and credit scores, and provides detailed information on credit history, payment patterns, and public records such as tax liens and bankruptcies.
• Equifax Business: This agency focuses on providing customized credit reports and scores to businesses, and offers a range of additional services such as fraud protection and credit monitoring.

To effectively interpret your credit report, it is important to understand the different terms and metrics used by these agencies. Some of the most common metrics include payment history, credit utilization, credit inquiries, and public records such as tax liens and bankruptcies.

What to Do If You Have a Low Business Credit Score

If you have a low business credit score, there are several steps you can take to improve it:

• Make on-time payments: Pay all bills and invoices on time to avoid late fees and delinquencies that can hurt your credit score.
• Reduce credit utilization: Keep your credit card balances low and pay off debt as quickly as possible to reduce credit utilization and improve your credit score.
• Negotiate with creditors: Contact your creditors and ask for payment plans or other arrangements that can help you pay off debt and improve your credit score.
• Dispute errors: If you notice errors or inaccuracies on your credit report, dispute them immediately to avoid negative impacts on your credit score.

The Future of Business Credit Scores

The credit reporting industry is rapidly evolving, with innovative technologies and alternative data sources changing the way credit scores are calculated and used. Some of the trends shaping the future of business credit scores include:

• Big Data: Credit reporting agencies are increasingly using data from non-traditional sources such as social media, phone records, and other digital footprints to evaluate creditworthiness.
• Alternative Lenders: The rise of alternative lending platforms such as peer-to-peer lending and crowdfunding is increasing competition in the lending industry, and creating new avenues for financing for businesses with non-traditional credit backgrounds.
• Technological Innovations: Advances in artificial intelligence, machine learning, and other technologies are making credit assessment and risk modeling more efficient, accurate, and accessible.

Conclusion

Checking your business credit score regularly is an important step in maintaining a financially healthy business. By following the steps outlined in this article, you can not only obtain your credit report, but also take actionable steps to improve your credit score and ensure success in the long run.

Remember, your credit score is not only a reflection of your creditworthiness; it is also a key factor in establishing trust and credibility with all stakeholders in your business.