Business credit scores work similarly to the way consumer credit scores do. When you check your business credit report, you get an overall credit score reflecting an independent analysis of your creditworthiness. It will also provide details about your company’s credit history, how promptly you pay your bills, and how much money you owe others.
Why Should I Check My Business Credit Score? Here Are Five Reasons
If you are thinking about whether checking your business credit score is a good idea, here are a few reasons why other businesses check theirs regularly.
1. Doing Business with Others
If you are applying for credit with suppliers, vendors, or other businesses, it helps to know what information they will find when they look at your credit history. If you can demonstrate you have a great credit record, you may be able to negotiate more favorable terms.
Because of your record of handling credit responsibly, you may be able to get a business partner to accept Net-60 terms rather than Net-30, for example. This gives you longer to pay and can improve your cash flow.
2. Applying for a Loan
The Small Business Association (SBA) reports that 27% of businesses were unable to receive the funding they needed to grow operations. The SBA also says that one in five business loans are denied because of bad credit.
If you are thinking about applying for a business loan or line of credit, you should pull a credit report for your business.
Lenders are always trying to mitigate their risk. Organizations with high business credit scores have demonstrated that they are lower risks, so they typically get the best rates available.
Your business credit report will be one of the key factors in how lenders approach your request. Your business credit score will impact whether you can get a loan, the amount of money you may be able to borrow, and the terms that go with it.
Lenders make funding decisions based on three variables:
- Funding costs for the lender
- Cost of loan service by the lender
- Risk in lending to your business
Typically, business loans are made based on the prime interest rate and additional points based on risk. During an uncertain economic climate, lenders are even more worried about risk. So, the better your business credit score, the more likely you are to get a loan.
3. Reducing the Cost of Business Insurance
Many insurance providers will also evaluate your business credit when they set rates or renewals on commercial insurance. Businesses with good credit tend to file fewer claims and pay their bills on time, so there is less risk for insurers.
4. Resolve Credit Blemishes
It helps to pull business credit reports regularly to see if there are any blemishes on your credit report. If there are, you can take steps to resolve any outstanding issues. If you are unable to resolve them, you want to be prepared to answer questions about what occurred.
5. Correcting Mistakes
Mistakes do happen. One of your vendors or suppliers may accidentally report incorrect information about your business. Your business information might get mixed up with another business with a similar name. Someone might just make a clerical error.
If you do not check your business credit score, you will not know an error has occurred.
Business Credit Reporting Bureaus Compared
The three major business reporting bureaus — Experian, Dun & Bradstreet, and Equifax — provide an overall credit summary score and predict how you will handle credit in the future. Each business reporting bureau has nuances that may be of interest to you so see this overview to learn which bureaus reports would be most valuable to you.
How to Check My Business Credit Score
With accredit, checking your business credit score by pulling a business credit report from Experian, Equifax, or Dun & Bradstreet is easy. You can scan the different reports to see which one fits your needs and then download them instantly.
The first step is to visit the myaccredit.com website and click on the Order Now button. Once you have registered your account and logged in to the site, you can view sample reports which will show you what information you get from the different business credit reporting agencies.
When you are ready, click on the Buy New Reports button and enter basic information about your business, such as name and address. Confirm the business name and select the types of report you want to add them to your cart. You can buy one or several.
Enter your payment information and place the order. You do not need to sign up for subscriptions or any ongoing payments. You will be able to instantly download a credit report for your business.