online business credit reports

Before we proceed, please answer us a vitally important question – do you receive a “lot” of trade credit applications every day? If yes, how do you respond to them? We mean, what parameters do you factor in to accept or reject the trade credit requests? Consult several business owners in your circle or go through their financial documents? Let us tell you that adopting these techniques frequently could make you miss vital financial details about your prospective business partners, which only leading credit agencies know. Thus, you might receive delayed payments for your client’s bills, resulting in reduced cash flow and other problems. In the worst case, you won’t get paid by your potential clients, compelling you to approach collection agencies for the fund recovery. So, a crucial question arises here, how to minimize your financial losses and maximize your benefits? Well, the “online business credit reports” is your best possible solution. 

These business documents will give you crucial insight into your prospective business partners’ financial health and reliability, which you must see before giving them a trade credit. 

With comprehensive online business credit reports at your disposal, you can understand how much of a financial risk a business is for you as of now. Remember, a high business credit score of the companies you want to give “credit” indicates their higher reliability to make payments on time and vice versa. 

Thus, based on the company credit score and other details in the online business credit reports you can accept or reject the trade credit application you receive. With that complete, now it’s time to see:

What will you find in the online business credit reports of major credit bureaus?

1. Dun & Bradstreet 

The business credit scores generated by Dun & Bradstreet measure different organizations’ potential risk factors, such as their payment performance and the chances of ceasing operations in the next twelve months. Just to let you know, the D&B generates three separate business credit scores, naming PAYDEX Credit Score, Commercial Credit Score, and a Financial Stress Credit Score.

We will see the two most crucial D&B credit scores in the following section of this blog: 

A. PAYDEX credit score 

This credit score will let you know how a particular business’s payment performance was in the last 12 months. 

The D&B gathers the data from various suppliers and vendors of the companies to generate their PAYDEX credit score. Let’s see below what each score range represents:

  • 100–80; Payments come up to 30 days before or on payment terms. It points out a Good Score.
  • 79–50; Payments come between 15 to 30 days beyond payment terms. It points out a Fair Score.
  • 49–1; Payments come between 60 to more than 120 days beyond payment terms. It points out a Bad Score. 

B. Financial Stress credit score 

This credit score shows the chances of a company to shut its operations in the upcoming twelve months. By seeing this score, you can make a rough idea of the risk that a business may fail to pay its invoices on time. 

2. Equifax

Just like other credit agencies, Equifax generates a specific business credit score that will help you interpret whether or not a business qualifies for getting your trade credit. They provide their clients with three different scores, measuring distinct risk factors: 

A. Business Payment Index

This score will help you know how active a company was when paying its creditors in the last 12 months. The Business Payment Index lies between 1 to 100, where the companies consistently meeting the payment terms of different vendors and suppliers get a higher score. And the ones that overdue the payments repeatedly receive a lower score. 

B. Business Credit Risk Score 

This score measures the likelihood of organizations failing in making the payments to their creditors or lenders on time. For instance, they may delay the “payment” for some reason or miss them altogether. The Business Credit Risk Score ranges between 101 and 992, where the lower score conveys a higher risk of failing to pay the debt by the due date. 

C. Business Failure Score 

With this score, you will “get an idea” of how likely an organization will stop its operations in the coming 12 months. The Business Failure Score stays between 1,000 to 1,880, where the lowest score communicates the highest risk of bankruptcy. 

3. Experian 

The third, most popular credit agency, Experian, calculates the credit score of businesses to let you know their probability of making payments in a delayed manner or failing to pay altogether. Their score remains between 1 to 100, where a higher score indicates a lower risk. 

For example:

  • The score between 100–76 represents the low risk of delinquent or defaulted payment
  • The score between 75–51 shows the low to medium risk of delinquent or defaulted payments
  • The score between 50–26 indicates the medium risk of delinquent or defaulted payments
  • The score between 25–11 conveys the medium to high risk of delinquent or defaulted payments
  • The score between 10–1 communicates the high risk of delinquent or defaulted payments

On a concluding note!

We hope you learned what information you will get in the business credit reports offered by each credit agency. So, if you want to get a thorough business credit report of your potential client company now, be the first to order it from the reputed business report ecommerce site on the internet.

By Darbaar

Anurag Rathod, as a blogger he used to spread all about app-based business, startup solution, on-demand business tips and ideas and so on.

Leave a Reply

Your email address will not be published. Required fields are marked *