Understanding business credit reports

Quick insights

• Similar to a personal credit report, a business credit report summarizes creditworthiness.
• Business credit reports include key information that lenders and other entities use to help determine things like annual percentage rates (APRs).
• You are not entitled to a free annual business credit report.

Are you an entrepreneur, small business owner or about to embark on a new business venture? You will likely hear about business credit reports during your journey, which are important to understand when operating a business. Like personal credit reports, they contain valuable information not only for lenders and other entities, but also allow you to review and assess your business’s credit health. Let’s review business credit reports in more detail below.

What is a business credit report?

A business credit report is a detailed document that provides a company’s credit history and current credit standing. It is used by lenders, suppliers and other stakeholders to assess the creditworthiness and financial stability of a business.

Business credit reports generally include, but are not limited to, the following:

• Business credit score—depending on the scoring model used, higher numbers indicate a lower risk.
• Payment history—this shows how often your business has made payments  on time and if it has missed any payments.
• Credit utilization—the amount of credit your business uses against the total available credit across your business accounts.
• Public records—including tax liens, bankruptcy and judgements.
• Company information—such as industry and business registration.

You may notice that many of the components included in a business credit report also appear in your personal credit report. While these two reports are different and come with separate credit scores, you can see that factors such as credit utilization and payment history are important for both your personal and business credit. Maintaining healthy financial habits, such as on time payments and maintaining a low credit utilization ratio, can be beneficial to your business’s financial health.

How business credit reports are used

Similar to personal credit reports, business credit reports play an important role in different financial situations, for example:

• When applying for a business loan or other business lines of credit, credit reports are evaluated during the application process.
• They also help lenders determine terms and interest rates on business loans, credit cards and lines of credit.
• When negotiating terms, such as with suppliers, about extending lines of credit.
• When a risk assessment of your business is conducted, which is often done to determine rates for insurance policies.
• During business analysis to help find areas of financial improvement.
• When reviewing another company’s financial health as a part of considering doing business with them.

As a business owner, it can be important to review your business credit report as part of keeping track of your business’s financial health. It can also help you assess your ability to get approved for future lines of credit. For example, you may review your business credit report and decide you want to improve your business credit score prior to applying for a business line of credit so that you can increase your chances of getting more favorable terms.

How to get a business credit report

Your business credit report may come from a credit bureau, such as Dun & Bradstreet^® (D&B), Experian™ Business and Equifax^® Small Business. Note that your business credit report may vary slightly from bureau to bureau and the credit reports may vary in cost.

Additionally, some online platforms may provide your business credit report, such as your financial institution’s online mobile app.

How to get a free business credit report

Unlike your personal credit report, you cannot receive a free annual business credit report from the credit bureaus. However, some bureaus may allow you just one free business credit report and may let you purchase more if you want to view future reports.

In conclusion

Business credit reports can be useful for making financial decisions, reviewing credit management and more.