Business Credit Information & Credit Reports
A business-to-business transaction is one business supplying another business with the materials it needs to manufacture a product or provide a service. The business purchasing the supplies may prefer to do so on credit. You need credit information before making the decision of whether to extend credit. However, the credit report alone may not offer a complete assessment, as only 10,000 of more than 500,000 vendors report their transactions, according to Experian.
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Age of Data
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Business data stays on the credit report for different lengths of time. Trade data along with bank and government data remain on the credit report for three years. Universal commercial code filings stay for five years. Judgments, collections and tax liens stay listed for six years, nine months. Bankruptcy is a black mark for nine years, nine months.
Dun & Bradstreet
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Dun & Bradstreet provides detailed information on companies worldwide. The firm compares companies to each other within the same industry, so you can determine whether a company has bad management or if that particular industry is in a downward trend. You will know the size of the company and how many years it has been in business. Additionally, Dun & Bradstreet provides an in-depth assessment of the company's financial position along with scores to assess whether it is likely to pay future obligations on time. However, a company has to choose to list with Dun & Bradstreet, so you may not always be able to use it as a resource.
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Experian, TransUnion and Equifax
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Experian, TransUnion and Equifax are the three major credit bureaus that provide business credit reports. Review the company's lines of credit, outstanding balances, its history of paying obligations on time and any judgments or other court action. Additionally, you can obtain industry reports to compare the company to its peers within its regional area as well as nationally. However, this information only includes vendors who report the transactions to the credit bureaus. You may have different reports from each of the credit bureaus depending on whether the vendor reports to one, two or all three of them.
Industry-Specific Credit Bureaus
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The many different industries each have their own credit bureaus that specialize in in-depth reporting for that particular industry. For example, the restaurant industry has its own credit bureau, as does the trucking industry. You may find information about a company from an industry-specific credit report that is not available from the major credit bureaus.
Self-Monitoring
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Businesses should self-monitor their credit information to quickly detect and correct errors. The continuation of some businesses depends on their access to credit, and errors may result in denial of credit by suppliers. Additionally, the reports comparing your business to your peers may offer valuable information to help you increase profits.
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References
- Photo Credit financial charts image by Chad McDermott from Fotolia.com
