Equifax Business Credit Report: What to Know

When you apply for a business loan, lenders will examine both your personal and business credit to determine the likelihood that you will repay your loan.  Equifax is one of the major credit bureaus that tracks business credit scores, and provides potential creditors with details like outstanding debt balances and past bankruptcies. It can also be used to help companies assess potential customers or businesses they are considering acquiring.

What is an Equifax business credit report?

An Equifax business credit report is a document that outlines your company’s credit history and previous interactions with creditors. Like a personal credit score, lenders can review it to determine whether a business is likely to pay its debts.

In addition to Equifax, Experian and Dun & Bradstreet are both major credit bureaus that track business credit scores. Each service allows you to access a single credit report, or a package of multiple reports, at various price points.

What’s in an Equifax business credit report?

Company information

One of the first things that will show on the report is your business’s basic information, including its name and any alternate names it works under (DBAs). It also includes contact information, phone numbers, addresses, related businesses, number of employees and owner information.

In addition, the report will show the business’s Standard Industrial Classification (SIC) code and the North American Industry Classification System (NAICS) code. These codes help to identify your business to the requestor.

An additional section at the bottom also outlines the business’s entity type and registration, property owned by the business, employee size and sales volume.

Score summary

The score summary is broken down into several individually-scored components:

• Credit Information (CI). The CI metric is an assessment of various attributes of a business’s overall credit history. A lower score indicates more positive attributes and less risk.

• Payment Index (PI). This is a measure of a business’s payment habits, and how quickly a potential creditor or collaborator can expect to receive payments. Like the CI, a lower PI score is more positive.

• Commercial Delinquency Score (CDS).  The CDS is an indicator of how likely a business is to become delinquent, charged off, or bankrupt within the following 12 months. Scores range from 101 to 662, and a higher score indicates a lower likelihood of delinquency.
• Business Failure Risk Score (BFRS). This score predicts the likelihood of a business failing within the following 12 months. Scores range from 1001 to 1722, and a higher score indicates a lower likelihood of failure.

Report highlights and alerts

This section overviews your company’s financial and credit information, including the number of open accounts and the total outstanding balance. It will also highlight any major delinquencies, collections or judgments you have, giving requestors a window into how well you manage your current credit.

Associated businesses or guarantors

The principal/guarantors segment highlights any businesses associated with your company, including any businesses acting as guarantors on your outstanding loans.

Industry trade and financial trade details

The Industry Trade Information section reports any open trade credit that your business has with industry suppliers. It will include the credit amount and total amount owed to the supplier.

The Financial Trade Information section includes a detailed list of accounts as reported by financial institutions. These institutions will report activity on your credit or deposit accounts, including outstanding balances, credit limit, balances past due, actual payments and overdrafts.

The institutions reporting include business loans or lines of credit, leases and credit cards.

Payment thread

This section of the report shows your company’s payment history. It looks at your payments on outstanding debt and your payments to creditors and suppliers who have submitted invoices. It looks at your total outstanding debt across previous quarters, showing the trend in how you pay down your debts.

Returned checks

This section will include details about checks that were returned due to unavailable funds. It will include the date of the check, check amount and bank information where the check originated.

Collections and legal details

Collections will show the third party collection agency’s name, the amount that went into collections status, the amount paid and the status of the account (whether it was paid or abandoned).

The legal details section will supply information on any judgments or legal suits that another person or organization has made against the business.

Information from the Superintendent of Bankruptcy

This section outlines any details about bankruptcies that your business has filed. It will include the court where you filed bankruptcy, the receiver and the trustee assigned to the case. This information will remain on file for five years.

Bank information

Equifax will periodically request information from banks about your accounts, the type of account (checking, savings or loan) and the amounts in each account. It will share this information with anyone who requests a credit report.

Liens detail

This section will give information about any loans in which your business has put up collateral to back the loan. It will include the amount of the loan as well as details about the asset being used, such as its VIN.

Factors that impact an Equifax business credit report

Four factors determine your Equifax business credit score:

• Credit history. This includes details about your total outstanding debts with various financial institutions and suppliers as well as your detailed payment history.
• Payment history and trends. Missing payments will hurt your credit while timely payments will help. Recent activity is more impactful than older payments and having past-due balances will hurt your score.
• Public records. Negative information in public records, like active liens or recent bankruptcies, will damage your score.
• Risk scores. These scores show your payment history and compare your business risk to others in your industry. These show when creditors can expect payment from you and whether you’re a risk for delinquencies or business failure.
• Firmographics. This considers your company’s size, age and industry. Older and larger companies will tend to have higher scores. Equifax also compares you to similar businesses in your industry. So, if most companies in your industry have high credit utilization, having high utilization will hurt you less than if most of your competitors had low utilization.

Why you might request an Equifax business credit report

When you apply for a business loan, lenders will look at your business credit report. Before they do, you should request a copy of your own credit report for a few reasons:

• To correct errors on your report. Credit bureaus may  have inaccurate or outdated information on your report that could be negatively affecting your score. It’s important to monitor and correct errors to maintain as high a score as possible.
• To learn how to improve your credit. Looking at your business credit report also helps you identify what you can do to improve your business credit score. For example, if you see that you have little to no credit data, getting a business credit card can help you start building a positive credit history.

In addition to pulling your own business credit report, you may use Equifax to access the credit history of other firms for a couple of reasons:

• To understand the payment history of a new customer. This can be a good idea when working with a new customer. If that customer has strong credit, you can feel more comfortable about extending credit. If they have poor credit, you might structure repayment to be more upfront.
• To assess credit information on a business you’re acquiring. You want to be prepared when purchasing a business. Getting a credit report can help you understand where the business stands financially and whether or not it’s a good investment.

• How to get an Equifax business credit report

  To get an Equifax business credit report, you’ll need to purchase one from Equifax. The company currently isn’t very transparent about pricing. You’ll have to sign up for an account and speak to a sales representative to get information about pricing.

What to do if there is an error on your report

If there is an error on your business credit report, you can  dispute the error online.  Make sure to have some documentation ready to prove the information is inaccurate.

Bottom line

Equifax business credit scores are useful for evaluating the risk of lending to or doing business with a company. Examining your own credit report can help you take steps to boost your score before applying for loans so that you can get the best rates and terms available to you. Accessing the credit report of companies you plan to do business with can also help you understand the potential risk of getting involved with a new customer or buying a new business.

Frequently asked questions

• How much does an Equifax business credit report cost?
  

  Equifax does not publicly disclose the cost of a business credit report. You can contact the company’s sales team to get pricing information.

• Are business credit reports public?

  Yes, business credit reports are public. Anyone can buy one from Equifax or another business credit agency. The report contains information about the company’s background, its owners, its subsidiaries and financial data such as its credit scores, and liens or judgements against it, and its banking, collections and trade histories.

• What is a good Equifax business credit score?

  Equifax has three scores on its business credit reports. The business credit score ranges from 101 to 992 and scores of about 550 or higher are generally considered good.