How to Comprehend your Business Credit Report
Your business credit score is just as important, if not more so, than your personal score. Despite that though, most business owners are unaware of what their business’s credit score is, much less how to read its credit report. If you own a business, it’s important to the success of your business that you’re familiar with its credit report and know how to comprehend it so that you may make lay the foundation for future investments by understanding which changes you need to make to your business’s credit and spending habits.
Score Range is Different
You may be familiar with FICO’s consumer credit score range of 350 to 850, but this is vastly different from a business credit score range. If you check your business’s score and see a 100, don’t panic, as that score is perfect. If you see anything below a 70 or 60, however, do start looking into methods you can use to increase your business’s overall score.
Access Isn’t Free
The three major credit bureaus offer a free report to consumers once a year, which is nice for people who don’t want to have their score dinged by a quick credit check. Unfortunately, however, obtaining a credit report will cost you roughly $50 per report.
The Reporting Agencies Are Different
You may be familiar with the consumer reporting agencies, TransUnion, Equifax and Experian. While you will continue to see scores from Experian and Equifax, the typically more lenient TransUnion score will be replaced with one from Dun & Bradstreet, a company that generates business reports for more than one million companies around the globe.
Privacy Doesn’t Exist
Only you and those whom you give access to can access your personal credit report, but your business credit report can be accessed by anyone who wishes to see your company’s credit information. Vendors, potential clients, lenders and even competitors can pull up your company’s credit report so long as they pay a fee.
Scores Are Calculated Differently
Consumer credit bureaus use a standardized formula to calculate your personal credit score, which is generally that formula set by FICO. The business reporting agencies, however, use their own formulas, which may result in different scores and even some mistakes, which is why it’s important for business owners to stay on top of their credit score and to contact the bureaus when they believe that a mistake has been made.
Your business credit score matters, which is why it’s important that you understand how to comprehend its score. Fortunately, credit reports for businesses are fairly straight forward, and by understanding the above, you can make sense of your company’s credit report with ease.