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Currently, most banks in the United States share their data with Equifax Small Business on their business loans and business credit cards. Typically it takes more time to build an Equifax business credit report.
In this report, you’ll find data like:
Payment Trends- When looking at your payment history, Equifax will consider any outstanding balances you have with vendors or creditors, such as days past due, and your business’s worst delinquencies over the past two years. This also includes non-financial transactions. A good score is contingent on your business paying back all its debts in a timely fashion.
Credit History- When Equifax looks at your business’s credit history, they will consider how long your oldest financial account has been opened. The longer your account has been opened, the better, as this reflects a longer credit history.
Other factors include credit inquiries and credit utilization. Having a lot of credit inquiries throughout your business’s history could be a red flag. As far as credit utilization, Equifax looks for no more than 30% to 40% at any given time ($30,000- $40,000 in use on a $100,000 line of credit).
Public Record- If there is negative information about your business on the public record, this will have an adverse effect on your credit score. This includes judgments against your business, credit liens, and bankruptcies. If your business has experienced any of these things, Equifax will also factor in recency to determine how severe of an impact these events will have.
Firmographics- Firmographics are the demographics of your business, such as company size, age, and industry. Equifax will compare your business’s firmographics to those of your competitors, and also to larger trends in your industry. When it comes to firmographics, older and larger businesses tend to score higher.
Breakdown of Scores
While most credit bureaus will provide you with a single credit score between 1–100, an Equifax business credit report provides you with three different scores: Payment Index, Business Credit Risk Score, and Business Failure Score.
Payment Index Score
Your Payment Index score is your typical credit score. This is a number between 1–100 with 1 being the worst score and 100 being the best score. The number is based on your business’s payment history. If you pay your bills on time, your score will be between 90 and 100. If you have even one bill that is between 1 and 30 days past due, your score could drop to between 80 and 89.
Having bills 31 to 69 days past due will drop your score between 60 and 79. A score between 40 and 59 reflects bills that are 61 to 90 days past due, and a score between 20 and 39 is for bills that are 91 to 120 days past due. If you have bills later than that, you can expect a score between 1 and 19.
Credit Risk Score
Equifax business credit risk scores range from 101 to 992, with a higher score correlating to lower risk. This score aims to help lenders answer the following questions: Will I be paid? When will I be paid? Is my customer facing financial difficulty? How much credit should I extend?
In general, a score over 556 is considered good while a score of 0 indicates bankruptcy.
Failure Risk Score
Your Equifax business failure risk score is a number between 1,000 and 1,610, with a lower score indicating a higher risk of your business ceasing operations within the next 12 months. This score is determined using commercial demographic data, credit and payment information, and company legal records.