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Use cases

Business Credit Reporting

Virtually all businesses rely on some form of credit to run operations. Options can range from credit cards to trade credit. A company’s ability to access credit at reasonable rates depends heavily on its financial status and credit rating. Several companies provide business credit reporting services to help creditors determine creditworthiness and set eligibility limits.

What Is a Business Credit Report?

This document contains information about the credit history of a company. Several business credit reporting agencies can generate various versions of this document, which includes a wide range of information affecting credit eligibility. This data could include payment history, number of late payments and liens.

What Does Your Credit Report on Business Activities Include?

Your commercial report looks very different from individual credit reports. One of the first distinguishing features is the business profile. Each company organizes the reports differently, but you can generally find this additional information in various sections:

  • Details on parent companies and subsidiaries
  • Registered business name
  • Number of employees
  • Incorporation details
  • Years in business
  • Type of business

Why Do the NAICS and SIC Codes Matter?

The credit report will also include two important pieces of data businesses often need to draw on when applying for loans. These are the North American Industry Classification System and Standard Industrial Classification codes. So, why do they matter?

Some industries have much higher risks than others, so creditors have stricter lending requirements, and insurance companies conduct more stringent risk assessments. The codes tell these companies whether your business falls into these categories. These are some of the riskiest ones creditors look out for:

  • Collections or money lending
  • Travel or transportation
  • Real estate investments
  • Financial investments
  • Restaurants
  • Car sales

What Are the Main Business Credit Reporting Vendors?

Several agencies provide credit reporting services for businesses. While you might recognize some of them from individual credit reporting, there is one that only handles commercial credit reports:

  • Dun & Bradstreet: One of the most popular and well-known credit reporting agencies, D&B is a go-to for businesses of all sizes.
  • Equifax: This consumer credit reporting agency also provides services for businesses of all sizes.
  • Experian: Like Equifax, Experian is primarily a consumer credit reporting agency, but it has some business credit products.
  • FICO: FICO is best known for developing the credit scoring model used by lenders to assess risk. However, the company also offers business credit reports.

Do Businesses Have Credit Scores?

Business credit scores are another interesting difference from individual credit. The scores do not follow the usual three-digit format you recognize as a consumer. Instead, there are several different types of scores. Consider the following:

  • SBSS? score from FICO Small Business Scoring Service
  • Credit ranking and Intelliscore from Experian
  • PAYDEX® score from Dun & Bradstreet
  • D&B rating from Dun & Bradstreet
  • Delinquency score from Dun & Bradstreet
  • Failure score from Dun & Bradstreet
  • Viability rating from Dun & Bradstreet

The Bottom Line

Before extending credit to new customers, check their business credit profiles and reports to determine eligibility. Doing your research helps reduce the risk of delinquencies from the start, saving you thousands of dollars?or more!

Even with the best credit practices, you still need accounts receivable software to ensure timely invoicing and payments. Finding one that automates the process can save you even more time and money. Gaviti provides software that facilitates this and so much more. Book your free demo today!


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