A business credit report can be an invaluable tool as you build your business and plan for its ongoing growth. Often, new business owners overlook the obvious-a business credit report can be used by both you and your creditors. As a business owner, you may find these reports useful as you evaluate your business to business (BTB) transactions. For example, you may need to know if other businesses with which you do business can be counted upon to pay their bills on time. Likewise, as you continue to build your business credit, banks, lenders and vendors may take a look at your business credit report to make sure that you are a reasonable risk, so just like you want to maintain a high personal credit score, so do you want to make sure that your business credit score positively reflects your business's credit history.

Most likely you are familiar with the major personal credit reporting companies, but you may not be aware that two of these are also involved in business credit ratings. In addition to consumer reports, both Experian and Equifax compile commercial credit reports. And there is also Dun & Bradstreet and Credit.net. Together, these four are responsible for the majority of business credit rating reports.

Before taking a look at each of the credit rating companies, let's first consider how these scores are compiled. Unlike personal credit scores which range from 500 to 800, in most cases, the business credit score is based upon a 100 point scale with 80 or above being desirable. This score is based upon several interrelated factors such as size and type of business, how long it has been in existence, history of payment to creditors, amount of outstanding debt and the total number of trade experiences. Each credit rating company uses these and other factors in their own unique formulas to generate their scores. Now let's take a look at the big four.

For many years now, the Dun & Bradstreet Corporation (D&B)has become almost synonymous with business credit rating. In fact, D&B had its beginnings in 1841. Since then it has continued to evolve into one of today's leading credit reporting agencies with its database that includes information about more than 100 million companies and corporations worldwide.

D&B says that their rating is based upon “A Rating Classification, which indicates a range of the company's worth as computed by D&B when a company provides D&B with book financial statements (Interim or Fiscal) or number of employees [and] a Composite Credit Appraisal, which reflects D&B's assessment of overall creditworthiness (risk of default and slow pay)” The PAYDEX score, developed by D&B has more or less set the standard for business credit rating. According to their web site, PAYDEX is defined as their “unique dollar-weighted numerical indicator of how a firm paid its bills over the past year, based on trade experiences reported to D&B by various vendors.” For more about how D&B rating and scores, take a look at their web page, “D&B Rating, PAYDEX, and Score Tables - United States.” Or you may want to check out “D&B Rating and Score Explanations.”

Equifax

Since 1899, Equifax has been considered the leader in consumer credit rating. Eventually, it expanded its services to include commercial credit ratings for small businesses in the United States and Canada. The Equifax Small Business Credit Report, which can only be accessed by members of the Equifax Small Business Enterprise exchanges, takes a look at a business's banking and leasing payment history along with its trade credit history. According to Equifax, this addition of the banking and leasing information makes their report different from those offered by other credit reporting companies.

As part of this report, you'll find the Equifax Small Business Credit Risk Score which evaluates possible risk within a 12-month period by taking a look at credit history available from the Equifax Small Business Enterprise (SBE) database. This score can range from 101 to 992, with a higher score representing a positive report. Another possible difference that Equifax offers is the blending of personal and business credit information, but only in accordance with the Fair Credit Reporting Act.

You can find a sample of the Small Business Credit Report by going to Equifax ePort.

Experian

TCompared to D&B and Equifax, Experian is a relative newcomer to credit reporting. Founded in 1980 in the UK, its primary focus was on consumer credit, but it has expanded its services to include businesses as well. In fact, on its web site, Experian boasts of a database of more than 18 million companies and offers five different types of reports including what they refer to as a snapshot, brief report that includes basic contact and corporate information along with an abbreviated account of the business's credit history. In addition, Experian offers a comprehensive report, a monthly monitoring report and information about a company's legal filings, such as bankruptcies, tax liens and judgments.

Perhaps one of Experian's best known features is its Intelliscore. Like D&B's PAYDEX, the Intelliscore ranges from 0 to100, with the higher score being the most desirable. Using sophisticated and complex statistical analyses and algorithms, Intelliscores are derived from Experian's National Business Database. For a product overview and to see sample reports, take a look at Experian's Smart Business Reports.

Credit.net

Credit.net, previously known as Business Credit USA, focuses exclusively on commercial and business credit reporting as opposed to consumer credit reports. You don't even need to be a subscriber to search its database using criteria such as company name, address or executive. Of course these search results do not return any credit reporting information unless you are a subscriber, but their web-based interface is convenient and easy to use.

Additionally, credit.net has sample reports and even better, a 72-hour free trial which offers up to 25 free business reports. To sign up for this free trial simply go to their site at www.credit.net

As you build your business, it is important to pay attention to your business credit score. Just as you regularly monitor your personal credit rating, so should you monitor your business credit rating to make sure that all of your relevant transactions have been reported accurately. While the four above credit reporting companies are the leaders in their industry, they are largely dependent others to supply them with the information that is then stored in their databases and analyzed.

The entire process of compiling and maintaining business credit reports is a complex one and often difficult to understand, but with a little effort, you can make good use of all that each of these four have to offer.