Business Credit

Basics of Business Credit

What You Need to Know About Business Credit

Business credit refers to the collection of scores, ratings, and other indicators commonly used by lenders, suppliers, customers, and other partners to quantify the risk of working with a company. To help you better understand business credit, we’ll walk you through the basics and how you can use business credit to help grow your business.
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How Business Credit Scores and Ratings are Calculated

Dun & Bradstreet compiles payment information and public records into various scores and ratings. Government filings, financial documents, loan defaults, legal judgements, and liens are just some of the data points that can be considered. Trade references—suppliers and vendors who report of payment experiences—are another important factor. Taken together, this information is part of what comprises the business’s credit file, which is part of a company’s Live Business Identity in the Dun & Bradstreet Data Cloud.

Good vs. Bad Business Credit and Incomplete Files

When a company is said to have good business credit, it usually means the organization has a record of responsible financial behavior. While past performance is no guarantee of future success, potential partners often check a business’s credit file to assess the potential risk of working with that company. Here are some possible benefits of good business credit:

  • Higher trade credit limits from suppliers
  • More favorable interest rates on loans from banks
  • Lower premiums on insurance policies
  • Better lease terms for equipment and real estate

Poor business credit is often the result of late payments, loan defaults, liens, or other financial woes. An incomplete business profile can impact your business credit as well, because without your business information in your file, Dun & Bradstreet is not able to generate all of your scores and ratings, which means a business viewing your company’s file won’t be able to get a complete picture of your company’s credibility. Bad business credit scores or an incomplete file can have consequences that may include:

  • Losing out on new contracts
  • Difficulty accessing capital from financial institutions
  • Higher insurance premiums
  • More expensive leasing and rental costs