The Top Secrets You Need to Know About Experian Business Credit
When talking about business credit, Dun & Bradstreet gets the most attention. Experian and Equifax still carry plenty of weight however. It would be dangerous to ignore them. In fact, Experian has a few secrets you may not know about. It’s time to bring those secrets to light. Let’s uncover the mystery that is Experian business credit.
Experian keeps business credit profiles on 99.9% of all United States companies. In addition, it boasts the credit industry’s most broad data on small and mid-sized businesses. In fact, your business is probably already listed on Experian. The mystery is, what exactly does that mean? What do they have on you, and where do they get their information?
According to Experian, all their information stems from third party sourcing. You cannot add anything to your profile. Of course, you can check your profile and let them know about any inaccuracies. However, you cannot add anything to it. As a result, you have to know what that report is telling lenders about you and your business. You need to know where the information comes from, and what you can do about it.
Keep your business protected with our professional business credit monitoring.
What Makes Experian Business Credit Different?
The great thing about business credit is that it is separate from your personal credit. Even if you have bad personal credit, you can still get financing for your business. That is, if your business credit is in order.
Experian business credit plays a little differently however. While your business credit score is still all its own, they add a business owner profile. Experian’s Business Owner Link automatically connects the credit history of over 5 million business owners to their business credit history.
This makes it easier for your creditors to get access to your personal credit information. In the eyes of the creditor, this is important for determining your overall creditworthiness. If you are being turned down by lenders for business financing and your business credit is ok, that could by why. Your personal credit history could be to blame.
What Do You Need to Know about Experian Business Credit Scores?
The first thing you need to know is this. There isn’t just one score. In contrast, there are a number of reports and scores. Lenders can choose to use any or all of them. Each one tells them something different. It takes all the scores put together to get a complete credit picture, but not all lenders look at all scores.
Intelliscore Plus
Quite simply, the Intelliscore Plus credit score shows credit risk based on statistics. It is a highly predictive score. As such, its main purpose is to assist users in making well informed credit decisions.
The Intelliscore scores range from 1 to 100. The higher your score, the lower your risk class. The opposite is true as well. The lower your score, the higher your risk class.
Score Range Risk Class
76 — 100 Low
51 — 752 Low — Medium
26 — 503 Medium
11 — 254 High — Medium
1 — 105 High
How Does Experian Credit Calculate the Intelliscore Plus Score?
One of the things Intelliscore is most known for is the identification of key factors that can indicate how likely a business is to pay their debt. There are over 800 commercial and owner variables used to calculate an Intelliscore Plus credit score. They can be broken down like this:
This is just your current payment status. It’s how many times accounts have become delinquent. It also shows how many accounts are currently delinquent, as well as your overall trade balance.
This one shows how many times your accounts have been sent to collections. It also notes the number of liens and judgments you may have, as well as any bankruptcies related to your business or personal accounts.
Frequency can also incorporate information regarding your payment patterns. Were you regularly slow or late with payment? Did you decrease the number of late payments over time? That affects your score.
This specific factor focuses on how you make use of credit. For example, how much of your available credit are you using right now? Do you have a high ratio of late balances when compared with your credit limits?
Of course, if you are a new business owner, a lot of this information will not exist yet. Intelliscore Plus handles this by using a “blended model” to identify your score. That means that they take your personal consumer credit score into account when determining your business’s credit score.
The Experian Financial Stability Risk Score (FSR)
FSR predicts the potential of a business going bankrupt or not paying its debts. The score identifies the highest risk businesses by making use of payment and public records. These records include all of the following and more.
- High use of credit lines
- severely late payments
- tax liens
- judgments
- collection accounts
- risk industries
- length of time in business
Experian’s Blended Score
This is a one-page report that provides a summary of the business and its owner. A combined business-owner credit scoring model is more comprehensive than a business or consumer only model. Blended scores have been found to outperform consumer or business alone by 10 – 20%.
Credit Monitoring with Experian Business Credit
Experian sells a number of products which can be used to monitor your business’s credit.
Business Credit Advantage Plan
This option is $149 per month and incorporates mobile-friendly alerts and score improvement recommendations.
Profile Plus Report
This report is $49.95 and includes in-depth financial payment details. It also offers predictive information on payment behavior.
Credit Score Report
A cheaper option at $39.95, it contains details on the company, credit information, and a summary of financial payment information.
Keep your business protected with our professional business credit monitoring.
Valuation Report
This report costs $99. It presents the market value of your small business and features key performance indicators. It also displays your company’s fair market value.
Premium Corporate Profiles
Experian also sells premium corporate profiles. These are enhanced profiles that contain added information. For instance, sales figures, size, contact details, products and operations, credit summary, any Uniform Commercial Code (UCC) filings will show up here. This report also includes fictitious business names and payment and collections history.
You can also subscribe to business credit alerts through Experian’s Business Credit Advantage program. This is a self-monitoring service that offers limitless access to your company’s business credit report and score. It allows business owners to proactively manage small business credit. Alerts are sent when:
– Company address changes
– Business credit score changes
– Credit inquiries show up
– Newly-opened credit tradelines are added
– Any USS filings open
– Collection filings open
– Any public record filings pop up. This includes liens, bankruptcies, and judgments.
It’s important to note however, you can monitor your business credit reports at http://creditsuite.com/monitoring for much less than what you can with Experian directly. This way, you can keep tabs on your information with Dun & Bradstreet at the same time.
How Can I Improve my Score with Experian Business Credit?
There it is, the big question. Once you uncover the mystery of the Experian credit score, then what? You understand what it is. You know how they arrive at it. Still, how can you change it if it is affecting your ability to get financing for your business? Are you just stuck?
The answer is no. It isn’t really that simple though. Changing a credit score doesn’t happen overnight. There are ways to give your score a little boost however. Eventually that bad score will be a thing of the past.
Make Current Payments Consistently and On Time
As we just discussed, your payment patterns and history are vital to your overall credit score. Overtime, paying your bills promptly will only help you. If your score is low due to payment history, this will absolutely take time. You have to start somewhere though, right?.
Correct Mistakes
Get a copy of your credit report from Experian and look over it for mistakes. Send a request for correction in writing. Be sure to send copies of supporting documents for each mistake that you find.
Watch the Debt-to-Credit Ratio
This is the amount of debt you have in relation to how much credit you have available. Say you have $100,000 in available credit. If your balance across all accounts is $99,000, that is a high debt-to-credit ratio. This will negatively impact your score. You have to use your credit, and you need to carry a balance. Otherwise, how would you have payments being reported? Just try to keep this ratio as low as possible.
Opening new accounts may help, as it will raise your available credit amount. However, the average age of accounts also carries some weight, and new accounts lower that number. You will have to find the balance.
Work with Starter Vendors
Working with starter vendors is a way to get more positive payment history recorded. As a result, your score will start going up. Starter vendors are those vendors in the vendor credit tier. They offer net 30 invoice terms and report payments to the business credit reporting agencies. Often, they will even do this without a credit check. Due to that fact, you can get an account with them despite having a bad credit score. Note that not all starter vendors report to Experian, so you will need to ask. Go here to find out more about starter vendors and the vendor credit tier.
Ask Non-Reporting Accounts to Report
Some accounts that you make regular payments on do not report to credit agencies. They typically are not required to. However, there is no harm is asking them to report your payments to Experian and the other agencies. Those reporting payments can definitely improve your credit score. Therefore, consider asking your landlord, utilities, and telephone companies to report the payments you make to them.
Don’t Forget About Your Personal Credit
While it’s true that personal credit and business credit are totally separate, we have shown that with Experian business credit, personal credit does carry some weight. As a result, be sure you stay on top of your personal expenses. Avoid unneeded credit inquiries, and refrain from compromising your personal credit for business demands.
Keep your business protected with our professional business credit monitoring.
Now You Know the Secrets
What’s the greatest secret we’ve uncovered here? There are really two. First, Dun & Bradstreet is not the only player in the business credit game. While they may be the largest and most commonly used business credit reporting agency, there is nothing to prevent lenders from using a different one. Many lenders use Experian.
The second secret uncovered is that your personal credit information definitely counts for something. At least, this is true with Experian business credit. When lenders pull a business credit report from Experian, they have access to the owner’s information as well. Due to this, if your personal credit is good, it can only help you. In contrast, bad personal could haunt you despite good business credit.
Experian Business Credit Uncovered: What Now?
The moral of the story? Everything counts. Don’t sacrifice your personal credit to build business credit. Rather, keep them both as positive as possible. Most “tricks” don’t work. There is no substitute for using credit wisely. Purchase only things you need. Take on only what payments you can handle, and make payments on-time. Remember also, they have access to other information. That could either help you, or harm you. Start now being aware of what is out there on your business, and work hard to balance out any negative information with positive actions.
There is no time like now to start. First, figure out what is on your report. Take a look at your personal credit report as well. You can get a free copy of it each year. Take a look and be sure to report any inaccuracies on it. Once you have a solid understanding of what your Experian report says, and where that information came from, you can form a plan. If things do not look good, make the necessary changes. Pay on time, do business with starter vendors, and ask non-reporting accounts to report. However, if everything looks fine, continue as you are and keep it that way. After all, you must be doing something right.
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