How to Read an Equifax Business Credit Report to Get Financing

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Business owners (or those thinking about starting a business) should know how to read an Equifax business credit report. On your journey to getting financing, you’ve learned about the importance of establishing business credit. Building a separate credit profile from your personal one is crucial for business financial success. how to read an equifax business credit report

If you’ve started establishing positive business credit, you’re on the right track. Your next step is to understand what information credit bureaus maintain and how lenders use it. Here’s why you should know how to read an Equifax business credit report:

  • To know and understand public information about your business.
  • To make sure the information is accurate and update it if it’s not.
  • To maintain and improve your business financial status.
  • To gain access to more credit options with better terms.
  • So you can learn how to review company information about those you’re considering working with.
  • To prevent potential loss in business.
  • To see how it differs from your personal credit report and why.

Taking the Mystery Out of Your Business Credit Report

Business credit reports aren’t the rocket science people make them out to be. It’s simple to update information and easy to track the activity.  In fact, the three major bureaus make information public for anyone to see. Like with your personal report, your business credit report is broken down in segments. There are just a few key differences tailored toward business financials and creditworthiness.

Among other things, your business credit report will include the following:

  1. What entity the company has established (corporation, LLC, etc.)
  2. Type of business
  3. Financial reports and other information that shows the company’s financial strength
  4. Payment status for loans and lines of credit

How Your Business Credit Report Differs from the Personal One

With your personal credit report, you’re used to dealing with Equifax, Transunion, and Experian as the three major credit bureaus. With business credit, the most influential bureaus are Dun & BradstreetEquifax, and Experian. Each of these bureaus are respectable companies with decades of experience in the industry.

How to Read an Equifax Business Credit Report

All three bureaus gather, analyze, and store business information. How and when they report the business activity differs slightly. Here’s what you should look for in your Equifax business credit report.

Business Profile Information

If you’ve ever review your personal Equifax credit report, you’ll see contact information and details about who you are, where you live, and what you do.The setup is similar for an equifax business credit report, but with more details.

At the beginning of your Equifax business credit report, the bureau lists basic information like your company’s name, address, and phone number. Other information in this section may be things that distinguish your business type, business structure, affiliates, and owner/officer names. You may come across your company’s SIC or NAICS codes within the profile too.

Most of the information listed here is basic details, but the portion with financial information is key for potential lenders. Viewing financial statements lets them know where you stand in business. If you’re doing well with sales and profit, lenders will assume you bear less risk with extending credit. Check your financial statement and information carefully to make sure it’s accurate. If you find errors, you can report the correct information and request an update.

Length of Time in Business

Personal credit reports will show time details like how long you’ve been in your home or age of your oldest form of credit. Your equifax business credit report tells how long your company has been around.

Most traditional lenders are reluctant to work with new businesses. They want to work with who they feel is more likely to repay the loan. Seeing a solid amount of time in business makes them feel more comfortable with taking a risk. Longer time in business means you’ve had time to make a profit. Established companies have experienced changes in the market and learning curves that new businesses haven’t.

Credit Activity

Seeing actual payment activity is another indicator of ability to repay future loans. That’s why it’s one of the most important areas of your equifax business credit report. This section also affects your business credit score. When you see your payment history on the report, you may find it categorized by payment type like:

Trade Payments

-vendors

-suppliers

Commercial Credit

-business loans

-insurance

-equipment financing

Liens, Judgements, Bankruptcies and Collections

If you’ve defaulted on a loan, the outcome will show up in this section of your business credit report. Businesses that have gone so far past due will have collection activity on their report. Those who have a lien against property for loans they didn’t pay will have that activity in this section also. A lien dedicates your funds or assets to the debt until it’s cleared. Any type of lawsuit or court orders will appear here too.

This section helps shows any business who plans on working with you what they’re getting into from a legal standpoint. If they’re planning to partner with you, they’ll know past activity affects your liquid assets. They’ll also know if they will be held responsible for your previous payment history. Prospective lenders will get more information about if you’re too much of a risk.

What You Should Know About Your Business Credit Score

One piece of advice about learning how to read an equifax business credit report is not to be alarmed to find what you think is a low score. When viewing your business credit score, you won’t see what you’re used to on your personal report. The highest score for a business report is 100.Things that impact your credit score differ between business and personal credit profiles.

Unlike your business credit report, your score isn’t out there for everyone to see. You must request it. You business credit score may also differ from bureau to bureau since they’re data and the time they report it varies.

Equifax reports three different scores. Each gives insight into the level of risk companies will take by working with you. The 0-100 score shows how well you’ve done making past credit payments. The Credit Risk Score falls between 101 and 992, and shows potential for delinquent activity. Their Business Failure Score is from 1000 to 1880 and determines the likelihood of your company going out of business within the next year.

What’s Next After Learning How to Read an Equifax Business Credit Report

Credit is everything in business. That’s why you don’t want to take it lightly or simply hope for the best. Now that you understand more about your Equifax business credit report, it’s time for a review. A credit expert can tell you more about how your company is doing with building business credit. You should also get advice on how to improve your business report and score.