Does your company have an Experian Business Credit Report?
Did you know that Experian Business might never get information from creditors regarding your company’s payment history?
Having an established business credit report with Experian Business is crucial to success in the business credit building process. It’s one of the three major business credit reporting agencies that creditors, banks, and suppliers use to assess a company’s creditworthiness. While suppliers tend to submit to Dun & Bradstreet, credit card issuers and banks tend to share data and pull from Experian Business.
So why wouldn’t creditors share payment data with Experian Business?
The reason is data supplied to business credit reporting agencies such as Experian Business is submitted voluntarily. There is no mandatory requirement for creditors, suppliers or lenders to share payment data with a business credit reporting agency. It’s important to remember, the business credit reporting agencies are businesses, not government agencies. They are in the business of collecting and selling data.
If a supplier or creditor that your company does business with isn’t listed on your company’s credit report, it’s because they do not report to Experian Business. The fact is not all suppliers/creditors report to a business credit agency. Of the 500,000+ suppliers extending credit in the U.S., only approximately 10,000 report.
Only by working with suppliers/creditors that report can you improve your business credit files and scores. As you know with strong business credit scores, creditors can quickly evaluate whether your business will pay its bills on time. So in order to ensure that you’re building up your company’s reports apply for credit with trade reporters.
Once you identify business creditors that report their trade information to Experian Business, be sure to check your business credit report regularly and verify that the information being reported is accurate and up to date.
In order to maximize your Experian Business credit report here are several key factors that play a key role:
- Trade experiences – the number of trade lines reporting have a significant impact to your scores. If a business has several positive trade experiences, the more likely a creditor will be willing to extend credit since there is more data to assess risk.
- Payment history – positive payments coupled with consistency and length make for the greatest impact to your business credit rating. Paying better than terms is also a good practice as it shows that your business can more than meet its financial obligations.
- Credit diversity – it’s important to show that your company can handle various types of financing such as short term financing, revolving credit, installment loans, leases, etc.
- Debt to credit ratios – while the number and types of trade lines play a factor in your business credit ratings, your debt to credit ratios are equally as important.
- Industry classification – the code you select to classify the industry your business operates in enables a creditor to decide if the industry is a high risk. Some industries such as real estate are considered high risk which many creditors tend to shy away from.
Getting listed with Experian Business is a key element to success in building a creditworthy business. If you’re not listed with Experian Business, it’s like having only one personal credit file established with Equifax and no file listed with Experian or Transunion. One established report with one agency is not enough information for a creditor to assess your company’s overall creditworthiness.
To check to see if your company has a listing with Experian Business, go to Experian’s Smart Business Reports to order your file. You’ll first need to conduct a search for your business, but once you identify your company, select the type of report you want to review.
If your business is not listed with Experian Business, you’ll need to start working with trade reporters in order to improve your profile.