How to Evaluate Business Credit Worthiness
Established business credit is a valuable resource, especially if you want to expand your business for further equipment, products, or services. Find out how your own credit is evaluated, or evaluate the credit of a potential business associate through these simple steps.
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Instructions
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Find out your paydex score. (See reference 1) Business credit operates slightly different than consumer credit. Consumers have scores from three credit reporting agencies: Equifax, Experian, and Transunion. The top credit scorers for businesses are Dun & Bradstreet and Experian. Your paydex score indicates whether you make timely payments to creditors. Your goal is to get 80 (out of 100 possible). You can check this score at Dun & Bradstreet's website.(See reference 2)
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Experian's credit scores depend on businesses voluntarily submitting information. If you have not registered for Experian, but you have been doing business with vendors and creditors who report to Experian, the reporting agency will have a file on your business.
In most cases Experian will charge for a business credit report. You can check your score on a monthly basis for a continuing fee, or just check the current score at a one time fee. Along with the score -- yours or another business -- Experian will report how your score ranks among other businesses and if the score is good, bad, or moderate. -
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Review your business or the other business's profit and loss statement. A profit and loss statement lets you know how much profit a business is made, if any, and if they had more expenses than profit, which equates to a loss.
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Tips & Warnings
If you have fewer than five tradelines a credit profile may not be set up for your business. In that situation, Dun & Bradstreet offers programs that will establish a credit profile for you at a cost.
