In addition to your personal credit score, if you’re a small business owner you also have a business credit score. Although personal credit scores are used to evaluate most small business owner’s credit worthiness—even those who have been around for several years – your business credit score is a key piece of being able to access capital. What’s more, if you don’t do anything to boost (or even know) your business score, your personal credit score will be the main proxy for your creditworthiness.
That’s why it’s so important to know your business credit score. Experian, Equifax, and TransUnion are the three biggest credit-reporting bureaus that monitor your personal credit and it’s important that you keep track of your personal score on a regular basis. Similarly, Dunn & Bradstreet, Experian and Equifax are the three primary business credit bureaus.
Dunn & Bradstreet
Dunn & Bradstreet’s credit score is primarily based upon how a business interacts with its vendors. They look at how delinquent a business might be and apply a 100-point score they call the D&B PAYDEX® to demonstrate how timely a business pays their bills. The higher the score the better.
They also look at other business-to-business data, bank data, and other information pulled from the public record, but their score is weighted toward trade data.
Equifax is the platform that transforms data collected by the Small Business Finance Exchange (SBFE) into a business credit report. The SBFE is where most banks report loan data, so the Equifax report is a reflection of how a small business owner makes credit card payments, repays a small business loan or a line of credit.
Equifax does monitor other business data like D&B, but it’s rating is weighted toward how a small business interacts with traditional financing.
The Experian business credit report could be considered the most balanced of the three. They collect a lot of bank data, but they also look at trade data and the public record. While some small businesses don’t use a lot of trade credit, but rely heavily on the bank others don’t access capital through the bank, but rely on terms from their vendors to do business. Everyone else does both.
All three agencies take a slightly different approach to how they evaluate the credit worthiness of a small business, and it’s important to know the difference and how it might impact your business credit score. How well you manage your business credit score can make a big difference in how easily you’re able to access credit to help your business grow and thrive.