Equifax Small Business Credit Report: What You Need to Know
Just as your personal financial history is tracked on an Equifax personal credit report, an Equifax small business credit report is a look at your company’s payment history and other information. Equifax is one of three major business credit reporting agencies including Dun & Bradstreet and Experian. Their reports could affect the way potential lenders or partners view your business.
What goes into an Equifax small business credit report?
An Equifax small business credit report provides in-depth information to help you make better business decisions and others to make decisions about their dealings with you. Using payment data reported by lenders and public information, Equifax creates a credit report that includes:
- Company profile: legal name, address, and phone numbers.
- Additional company information: alternate business names, owner and grantor names, and business and credit grantor comments.
- Credit summary: A listing of all credit accounts, including those with banks, suppliers and service providers.
- Public records: Business registration with the Secretary of State as well as any judgments, liens or bankruptcies.
- Payment trend and payment index: Your company’s payments from the past 12 months compared with normal payment trends in the industry.
Unlike the single number of an Equifax personal credit score, Equifax creates three different numbers for small businesses:
1. Business credit risk score
A numerical score from 101-992 that predicts the likelihood a business will have severe delinquencies (over 90 days) or charge-offs in the next 12 months. A charge-off occurs when a debtor is delinquent on a loan and the lender deems that the outstanding balance is uncollectible. The outstanding loan balance hasn’t been forgiven, so businesses do still owe amounts that have been charged off.
2. Business failure score
A numerical score between 1000 and 1880 that shows how likely it is that a business will fail through either formal or informal bankruptcy in the next 12 months. Informal bankruptcy occurs when a debtor avoids paying off their debt without formally filing for bankruptcy because a lender decides that it will be too costly to collect that debt.
3. Payment index
The payment index value is based on a business’s past and current payment history. The value ranges from 1-100, with a score of 90-100 meaning that the business has made payments on time.
We’ll take a closer look at the payment index and scores below.
Explaining the scores
The Equifax business credit risk score, Equifax business failure score and payment index represent different metrics to help assess financial health.
Business credit risk score
Similar to a personal credit score, a lower score represents a higher risk for lenders. If there’s a bankruptcy on file the score is 0.
Business failure score
Likewise, a lower business failure score means a higher chance of bankruptcy.
This will show you a business’s past and current payment performance compared with transactions available in the Equifax commercial database.
Why you might want an Equifax small business credit report
You know that checking your personal credit score is a smart financial move. But here’s why getting an Equifax small business credit report is also a smart financial move for your business.
Opportunity to check for errors
Your business may at some point depend on outside financing — possibly a loan from a bank or a line of credit from a supplier. When you apply for financing, it’s likely that a lender will check your business credit report as well as your personal credit report. It’s a good idea to make sure that information is accurate, before you apply for credit.
If there are any errors, you’ll need to contact your credit reporting agency and open an investigation into the error.
How to dispute Equifax errors
To start the dispute process, log into your member center account and use one of the options available to contact Equifax. You’ll need to purchase an Equifax report in order to register for an account. Equifax will provide you with a Research Request Form to fill out and return. It will verify the information with the reporting entity and you’ll receive the results 45-60 days later.
Improve your current credit scores
Even if there aren’t errors on your business credit report, you may not be happy with your scores. Checking your report helps give you insight that you need to improve your standing.
If you are able to improve your credit scores before you need to borrow money or open a line of credit with a supplier, you’ll be in a better position for favorable rates and terms. Credit score is one of several requirements lenders will consider when assessing your financing application.
Make decisions about extending credit
If you extend credit terms to other businesses, you’ll want to know their background and how likely they are to pay you. Getting a credit report can help you extend credit confidently.
Evaluate another business
If you’re considering purchasing another company — or just want a little more insight into a competitor — a credit report can give you a wealth of information. You’ll be able to see what liens are held against a business, to whom they owe money and how quickly they repay their debts. This basic information is a start when evaluating the purchase of another company.
How to check your business credit score
Equifax, Dun & Bradstreet and Experian offer credit reports that you can buy online. But there are differences as to what you’ll find on each — as we mentioned, each agency offers different scores to help judge a business’s credit risk and financial stability.
Here’s how each of their offerings compare:
|Where to Find Business Credit Reports|
|Agency||Key measurements||Cost||Credit monitoring available?|
||$99.95||Yes, for an additional fee|
||Basic credit score report $39.95||Yes, for an additional fee|
|Dun & Bradstreet||
||Basic report for $61.99||Yes, for an additional fee|
Equifax vs. Experian vs. Dun & Bradstreet
An Equifax small business credit report is the most expensive of the three options — see a sample report here. The Equifax business credit report includes more scores than the Dun & Bradstreet Credit Evaluator Plus basic report though D&B offers pricier reports with more information. However, the Equifax and Experian CreditScore report includes similar metrics.
Experian includes two scores that are similar to what you’ll find with Equifax. Its reports include a financial stability risk rating from 1-5, with lower ratings meaning lower risk, and a business credit score between 1 and 100, with higher scores meaning lower risk. A payment trend summary shows how the business’s payments are trending over time. See a sample Experian business credit report.
Dun & Bradstreet offers a credit report for $61.99 that shows these key metrics:
- Paydex score: A dollar-weighted indicator of how a business has paid its bills. Scores are from 1-100 and the higher score signals lower risk.
- Credit limit recommendation: A dollar value recommendation based on an analysis of similar companies.