A business credit report is a report that contains detailed information about the business and its owner. It explains the credit score of the business and the reason behind the same. Business credit reports are obtained from any of the three leading consumer credit bureaus- Equifax, Experian, and Dun and Bradstreet. The business credit report is very important as it will be used to calculate the business credit score of the business.
A business credit report is a direct reflection of the overall financial health of the company. It affects business loan approvals, financing, credit card(s) and mortgage rates. It is important to note that all credit reports are not the same because the different credit bureaus may include different information and formulas to formulate the report.
Generally, the following things/items are included in a business credit report-
- Business profile which includes name and address and location of the company
- Financial data like profits, annual sales, and income statements
- Number of employees and other corporation details
- A list of the current and closed credit accounts associated and owned by the business (e.g. business loans, mortgages, business credit cards)
- Payment history for any bills owned by the company
- Available credit lines and the amount of credit used
- Trade transactions with suppliers, vendors and payment history
Decoding Business Credit Report-
Business credit reports are generated automatically by credit bureaus like Equifax and Experian. This is done by obtaining the state records for new business filings any other public records. The information that is collected from all these sources is combined to make the business credit report.
The information present in the business credit report is summarized in the business credit scores. Business credit scores are very different from personalized credit scores. Business credit scores don’t have any particular value ranging from 350 till 850 like personalized credit scores and the credit agency assigns several different scores.
How to review business credit report?
As the business credit reports contain a multitude of information, it needs to be reviewed carefully to ensure accuracy and that all of the information is understood. Some of the section that the report contains and its interpretation-
- Business Profile
- Trade Payment History
- Commercial Financial History
- Bankruptcies, Legal Filings, and Collections
Both the individual credit score as well as the business credit report are important as it determines the overall status of the business as well as the individual and their interdependence on each other. It is also important to note that everyone owning a business must learn to read the business credit report properly