Dun & Bradstreet is the primary company used to assess business credit and issue a credit rating known as Paydex.
There are also other companies that provide similar credit evaluation services to companies based on their independent databases.
One of them is Equifax, which offers a business rating credit model known as the Equifax Small Business Enterprise / Equifax Small Business Credit Risk Score.
Equifax, one of the top three consumer credit rating agencies, now provides business credit assessments for more than 22,000,000 small businesses and corporations to detect the first signs of problems by monitoring key customers, suppliers and partners.
The Equifax model is designed for companies that provide goods and services to small businesses.
The score was created to improve risk assessment throughout the account life cycle by predicting the likelihood that a new or existing small business customer will incur serious delinquency on vendor accounts or on bankruptcy within a 12-month period.
Credit scores range from 101 to 816, with a lower score indicating a higher risk of serious delinquency.
There are also four reason codes that indicate the main factors that affect the credit rating for a better understanding of risk.
Equifax provides credit risk models for both consumers and businesses, but there are considerable differences between the two.
What Can Business Credit Do For You?
You want to protect your personal finances. But when you own a business, this is very difficult to do.
Most creditors and lenders require that you provide your own personal guarantee for anything you do for the business.
This means that if something goes wrong at work, they will also come after your personal assets.
What they don’t want you to know is that you CAN easily get money for your business without offering this personal guarantee.
Business is credit that you obtain in the name of your business. It can be approved without the need for a personal guarantee.
Your profile is used to approve you, not your personal credit profile. So this means that there is no personal guarantee and no personal credit check is required.
It is easier to qualify for business credit than most consumer credit. And generally, the approval limits are higher, too.
Therefore, this doubles your borrowing capacity and still reduces your risk.
As you use it, you get approved for higher limits and more unsecured credit with Visa and MasterCard.
This helps you have a blank security in a time of need. And most importantly, you can use this credit without having any personal financial responsibility.
Your value and borrowing power will greatly improve the higher the business score and borrowing potential of your business.