Just like with your personal finances, a strong business credit score can help your business. Lenders use this score to determine whether to lend to you, how much to lend to you, and at what rates.
Suppliers pull your business credit scores to calculate what kind of terms to extend to you. The better your business credit, the more likely your business is to succeed.
It’s not easy building something valuable
Listen, you don’t need me to tell you that building a business is hard. Especially in the early days, when money is tight, it feels like you have to balance everything: sales, customer service, marketing, and operations. If you don’t do it, it doesn’t get done.
So, the 28 million small businesses in the U.S. are busy chugging away, balancing short term needs with long term goals. That’s why SMBs account for 54% of all U.S. sales — they know how to hustle.
It’s the transition from starting something to creating a stable business where many SMBs fail to thrive. Not to be a total downer, but small business survival rates aren’t pretty. About one third of businesses with employees won’t survive two years. Things seem to look better one a small business is about 5 years old. Regardless, getting out of the woods financially requires being able to access more money for your business when things get tough.
Good business credit: your invitation to dance at the big show
The difference between a successful SMB and one that doesn’t make it frequently comes down to managing cashflow. But when it comes to using financing tools the big boys use to grow their businesses, many entrepreneurs and small business owners I’ve met over the years get frustrated.
Your business credit, much like your personal credit, is your report card that lenders and suppliers use to judge whether to do business with you or not. The first step in improving your chances to expand your business by accessing outside financing is pulling your own credit score.
Unfortunately, there’s no equivalent of a free credit report for businesses like consumers get. U.S. law mandates that people get access to their personal credit score one time per year. No such thing exists for business credit. Some credit reporting services have free trials and many offer a single sample business credit report, but for the most part, you’re going to have to pay to play when it comes to getting your business credit score.
13 places to get a business credit report
Before we provide a list of places to access your business credit report, it’s important to note that many sources repackage or resell other reports. Just like in consumer credit scoring Equifax, Experian, and FICO are active in the business credit space and many providers resell their products.
Ansonia was founded in 2006. The firm’s business credit reports focus on how companies pay their bills and less on financial statements or the quality of their offices. The company claims that its global database has daily updates to 25 million account activities and over $700 billion in trade accounts receivable data.
Business Credit Reports offers its comprehensive reports. These include D&B PAYDEX scores, Experian trade data, public records, UCCs and Equifax trade and OFAC data. BCR has a variety of reports for sale with samples of all of them. You can also buy D&B Trade Plus, Equifax Pro and Plus, and Experian Premier Profile reports.
As a commercial credit bureau, Cortera covers 10 million businesses and over $1 trillion in annual transactions. Cortera’s Pulse product is a credit monitoring platform, meaning it notifies you if there are any changes in a business’s payment behavior, predictive risk scores, tax liens, civil judgments or peer payments. These alerts were developed to monitor a business’ customer portfolio but there’s no reason you couldn’t use it to monitor your own credit. Cortera is also very focused on undercutting D&B pricing and provides free business credit reports when you sign up for a demo.
While not exactly free, Credit.net has an interesting 7 day + 7 free credit reports free trial. Credit.net include a credit score (rated 0-100) and a recommended credit line. Reports include legal filings, basic business information, estimated annual business expenditures, and UCC filings. Credit.net also provides monthly updated UCC data.
CreditSafe provides more international coverage than most other business credit reporting services mentioned in this list. The 10 year old firm claims it covers 240 million companies worldwide with risk ratings and trade payment data. In terms of trade payment lines, CreditSafe claims to provide over 50 lines of information on average in its reports and show more than one line on at least 24 million businesses. The company also offers a free business credit report.
The company’s flagship product, eScores, are used by other B2B firms to assist in decisions relating to fraud prevention, credit assessment, and collection decisions. The firm also offers verification and monitoring services, which verify the existence of a business and delivers alerts when there are any changes in creditworthiness of a business. According to the company, eScores provide insights on over 35 million U.S. businesses, especially on small businesses with under $10 million in sales.
One of the 800 pound gorillas in consumer credit reporting, Equifax also has its hand in providing business credit reporting for small businesses. The credit bureau recommends using its Equifax Business Credit Reports to keep track of your own business credit activity and financial health. Customers will pay around $100 for a single report that includes the Equifax Business Credit Risk Score and Equifax Business Failure Score.
Experian also encourages small business owners to pull their own business credit reports to monitor and improve your business credit score. You can pull a single report or subscribe to a yearly monitoring service of your business credit report that includes alerts on changes to your score as well as unlimited score/report access.
While it’s not really one of the big credit bureaus, FICO is a major player in the credit reporting space, with data, tools and methodologies it supplies to the rest of the industry. If you’re looking for how your business credit score can impact being approved for a loan, FICO SBSS (scored 0 – 300) is an important data point. You can’t go to FICO directly to get this score — you’ll have to work with another business credit reporting service that integrated FICO SBSS ratings into its product, like Nav.
LexisNexis is a large data company that may be best known for its legal and professional solutions, but it’s also active in risk measurement. Its Small Business Risk Score was developed to help businesses do business confidently with small businesses that historically proved difficult to transact with. In contrast to some of the other scores in this list, the Small Business Risk Score isn’t based on credit and uses LexisNexis huge repository of business public records combined with analytics to score companies that have never had an established trade line credit history. The company also provides a more traditional Small Business Credit Score. Like FICO, these scores aren’t available directly from the company.
Nav is one of the newcomers to the business credit reporting space and has raised tens of millions of dollars in venture capital. It bills itself as the “CreditKarma for businesses”, which means it provides free access to business credit scoring in return for your data. Nav does a lot of interesting things, including providing users with free Experian and D&B business (and some personal) credit scores, as well as some modern monitoring tools. Nav also has a loan and credit card marketplace.
Paynet provides research, data, and tools to lenders working with small businesses. Paynet’s Credit History Report is billed as a better indicator of credit quality versus the typical Net 30 trade data that many business credit reporting firms use. Payment history for each individual obligation are broken down on contract-by-contract basis, so you can see how a business has paid back each lender it’s worked with. Like FICO and LexisNexis, you can’t really find your own company’s Paynet report without accessing it through another service.
Accessing your business credit report and score is just the first step in a process of improving your firm’s creditworthiness. Score and report in hand, the next step is to continue to build positive business credit. As your business credit improves, you’ll experience new business opportunities and improve your SMB’s chances to succeed.