Obtaining your business credit profile, options available and improving the results.

Part 2 of 3

Last week we discussed the importance of knowing your personal and business profiles. This week we are going to investigate the options available, pros and cons to the different types of reports and services and how to improve your rating.

A strong and sound personal and business credit profile is key to achieving your business growth and development. Your business credit reports tell lenders, suppliers and business partners your credit history, rating and how likely you are to repay them on time. It will also assist in your negotiations for preferable lending, discounted early payment terms and lower insurance rates.

There are many organisations that offer credit profile scoring and some even offer free trials. There are also different levels of reports and services; therefore, it is advisable to check which will be the best report or service for your business. You may just want to do a check once in a while, or you may want something you can check on a regular basis.

There are two commonly used scores – Personal FICO scores range from 300 to 850; business credit scores generally range from zero to 100.

We have researched four of the main providers and below are the details of the reports and services they offer.

CreditSafe offers a free company credit score and report to allow you to check your business credit profile. You input your information into their online system and they will then give you a call and provide access to their systems where you will have the opportunity to explore their Credit Reports with the option to trial other products in the CreditSafe suite. The length of the trial will be determined on the initial call and you will gain full access to their data ( as on their paid services.)

The report includes:

  • Credit Scores & Limits – Full UK & Ireland company credit reports.
  • Company Financials – Access full company financials from the past 5 years.
  • Trading Locations – Explore the full list of company trading addresses.
  • Directors & Shareholders – Access company director and shareholder profiles.
  • Corporate Linkages – View ultimate and parent holding company details.
  • Adverse Credit Insights – Review adverse payment and CCJ information.

Experian offers a Limited or Non-Limited Credit Report giving you invaluable insight into your business.  For those looking into your business it will demonstrate your financial stability, allowing others to make faster and better risk decisions about working with your business. Experian provides a one-off report for £24.99 & VAT.

Experian credit reports:

  • Access business and director/owner credit reports
  • Instant access to key corporate information
  • Assess company stability at a single glance, with optional corporate tree
  • Insightful, long-term view of a company’s performance through Commercial Delphi Credit Score trend information
  • Easy financial interpretation with analyst comments
  • Comparison of the Commercial Delphi score against the business population gives you more context to make a decision
  • Shareholder information for sharper insight into company status and a quick understanding of any majority shareholding
  • Experian’s Commercial CAIS information is also available for insightful detail on how your customers pay other businesses

Equifax offers three different assessments for businesses on its business credit reports, the payment index, the credit risk score and the business failure score and measures:

  • Company size
  • The available credit limit on revolving credit accounts, such as credit cards
  • Length of time since the oldest financial account opened
  • Evidence of non financial transactions, such as invoices from a vendor, being delinquent or charged off for two or more billing cycles

The “business failure score” measures the likelihood of your business closing within a 12-month period and assesses:

  • The age of your oldest financial account
  • How much of the credit limits you’ve been using over the past three months
  • Whether you’ve had any delinquent accounts or late payments in the prior 24 months
  • Evidence of non financial transactions, such as supplier invoices, being delinquent or charged off for two or more billing cycles

For both the credit risk score and the business failure score, a rating of zero indicates bankruptcy.

Dun & Brad Street (D&B) offer the Statutory Credit Reporter which provides you with access to your standard credit file. In addition, they also offer the D&B Credit Monitor, which provides you with the standard credit file together with additional elements:

  • Access your full D&B credit report for 12 months
  • Alters on changes in your score
  • Benchmark performance against your peers
  • The ability to include your report in tenders
  • Get your D&B D-U-NS Number

It must be noted that each CRA may hold different information and therefore your credit score may differ depending on the CRA you use and what your creditors or lenders see.

So by knowing and strengthening your business credit score, you will

  • Help increase your ability to obtain finance
  • Increase to amounts of finance youcan access
  • Help to negotiate better rates and terms of finance
  • Improve the number of lenders you can do business with

Next week we will look at how creditworthy your customers are and why would you need to know.