An entrepreneur always has to have a know-how on how business credit bureaus create and maintain or update their business credit profile. Their business credit profile is also termed as their corporate credit profile. Once they understand this information, they should proceed to know how reporting agencies grade and rate them. Having this information will help business owners put a more positive spin on their credit profile resulting to a possible significant increase in the business’ credit success and worthiness. Since different agencies have different ways of measuring or rating, it is important that we take a look at how each agency does it.
For Dun and Bradstreet or D & B, a business’ credit worthiness is measured using a scoring system by numbers, which involves a proprietary Paydex. Since they follow an approach, which is multi- tiered, aside from that measuring system, they also created the Data Universal Numbering System, which sets them apart from other reporting agencies. This system is recognized by both the international as well as the federal governments. Their Paydex system gives the business their baseline numeric score based on the business’ present payment capabilities along with their payment history. Aside from that, D & B also makes use of a credit rating system, which assigns business a rate from 1 to 4.
For Standard and Poor’s or S & P, it is quite different. The agency makes use of an alphabetical scale with the lowest being D and the highest being triple A or AAA. The new businesses may be reported as NR or Not Rated, which means that the business is still fairly new and therefore, has not been rated yet. The agency also has what they call an informed statement termed as “credit watch”, which means that there may be a change to a business’ credit rating, which can either be positive, negative or uncertain.
Equifax is one of the more known credit reporting agencies and their rating is quite similar to how they rate personal credit. For businesses, they give a Small Business Credit Risk Score, where the numbers range anywhere from 101 to 992. Like the personal credit score, the lower the score, the higher the risk and vice versa. They also make use of what they term as “reason codes”, where the codes identify what factors made an impact to their credit score. They also have another rating system called “Commercial Score”, which measures how wealthy entrepreneurs who like luxury meet other obligations such as lines of credit from banks or leases or real estate versus their trade credit obligations.
The last business credit reporting agency that will be described in this article is ClientChecker. They describe themselves as freelance and make use of an invoicing program’s users’ reports to create a rating for a business. The ratings are numeric in nature, known as a business’ PayQuo score. The PayQuo score indicates a business’ credit worthiness. Aside from the PayQuo Score, CreditCheck also includes an Aggregate Business Credit Report where information about a business’ late payments and non- payments are reflected.