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Businesses, just like individuals, have credit reports and credit scores. When you apply for a business loan, lenders will examine your business and personal credit when making a lending decision.
Equifax is one of the major credit bureaus that tracks business credit scores. Understanding how business credit works can be key to ensuring you qualify for loans to help you grow your business.
- Equifax is one of the major business credit bureaus
- Business lenders usually look at both business and individual credit scores when reviewing an application and may request a copy of your business credit report from Equifax
- Equifax breaks your business credit into three factors: Payment Index, Credit Risk and Business Failure
- Some of the factors that Equifax considers when generating your risk scores are your interactions with credit, payment history, public records information and how your company compares to others in the same industry.
What is an Equifax business credit report?
An Equifax business credit report is a document that outlines your company’s previous interactions with credit. Like a personal credit score, lenders can review it to determine whether a business is likely to pay its debts.
Equifax’s business credit reports contain the following information.
An Equifax ID is an identification number that Equifax assigns to every business with a credit report.
One of the first things that will show on the report is your business’s basic information, including its name and any alternate names it works under (DBAs). It also includes contact information, phone numbers, addresses, related businesses, number of employees and owner information.
This section of the report contains information about your business’s financial situation, such as current bank balances, assets, properties, inventory levels and recent sales numbers.
This section of the report also reports your company’s payment history. It looks at your payments on outstanding debt and your payments to suppliers who have submitted invoices. This section also details the average amount of time it takes to make payments compared to the industry average.
This section contains information about any public records related to your business, such as recent bankruptcies, outstanding liens or judgments and other filings.
Why you would want an Equifax business credit report
When you apply for a business loan, lenders will look at your business credit report. Before they do, you should request a copy of your own credit report and examine it.
There are a few good reasons to request your credit report.
One is to have a chance to examine the report for errors. Credit bureaus aren’t perfect, and they might have inaccurate or outdated information on your report. If that info is negative, you can get it removed, which can boost your score.
Looking at your business credit report also helps you identify what you can do to improve your business credit score. For example, if you see that you have little-to-no credit data, getting a business credit card could help you start showing a history of good interactions with credit.
You can also request a business credit report on other companies.
This can be a good idea when working with a new customer. If that customer has strong credit, you can feel more comfortable about extending credit. If they have poor credit, you might demand immediate payment instead.
Credit reports can also be useful for gathering information if you’re considering acquiring another business or researching a competitor.
Factors that impact an Equifax business credit report
Four factors determine your Equifax business credit score:
- Credit history. This includes details like your credit utilization, total debt, the age of your credit, and recent credit applications.
- Payment history and trends. Missing payments will hurt your credit while timely payments help. More recent activity is more impactful than older payments and having past-due balances will hurt your score.
- Public records. Negative information in public records, like active liens or recent bankruptcies, will damage your score.
- Firmographics. This considers your company’s size, age, and industry. Older and larger companies will tend to have higher scores. Equifax also compares you to similar businesses in your industry. So if most companies in your industry have high credit utilization, having high utilization will hurt you less than if most of your competitors had low utilization.
How to get an Equifax business credit report
To get an Equifax business credit report, you’ll need to purchase one from Equifax. The company currently isn’t very transparent about pricing. You’ll have to sign up for an account and speak to a sales representative to get information about pricing.
What to do if there is an error on your report
If there is an error on your business credit report, you can reach out to Equifax to dispute the error. You can do so by contacting Equifax, signing in to your online account and disputing the error.
Make sure to have some documentation ready to prove the information is inaccurate.
Alternatives to Equifax business credit report
Equifax is one of the three major business credit bureaus. If you don’t think Equifax’s credit reports are right for your needs, you can consider other options.
- Experian. Experian is another credit bureau that tracks both personal and business credit scores. It provides two scores on its business credit reports – a financial stability score and a business credit score.
- Dun & Bradstreet. This company only focuses on business credit and does not offer personal credit scoring. It generates a Paydex score from 1 to 100 that rates how promptly a company pays its bills. It also offers recommendations for the credit limit lenders should consider for a business.
Equifax business credit scores are useful for evaluating the risk of lending to a company. Take steps to boost your score before applying for loans and consider getting the credit report of companies you plan to do business with.
Frequently asked questions
Equifax does not publicly disclose the cost of a business credit report. You can contact the company’s sales team to get pricing information.
Yes, business credit reports are public. Anyone can buy one from Equifax or another business credit agency. The report contains information about the company’s background, its owners, its subsidiaries, and financial data such as its credit scores, and liens or judgements against it, and its banking, collections and trade histories.
Equifax has three scores on its business credit reports. The business credit score ranges from 101 to 992 and scores of about 550 or higher are generally considered good.