How To Interpret Your Business Credit Report: 5 Tips

A business credit report is similar to a school kid's “grades” - although the grades refer to a small - medium or large business entity's dependability to handle its debt's - as well as the ability to qualify for loan from creditors. Here are 5 helpful tips for interpreting and evaluating your business credit report.

Payment History

When evaluating your payment history - check out if your payment history is correct and accurate. Paying within the terms set by your suppliers and creditors may be a very nice ay for creating a positive business credit profile. Also look out for any payment trends that may raise red flags among creditors - such as shifting from paying full each month - to only making minimum payments. If you have been making on-time payments to suppliers and creditors - this should be fully reflected in your profile.

Company Profile

When evaluating your company profile - verify the details for accuracy - such as business name and length of doing business - address - telephone number and industry type. As most of the data here is self-reported - the business owner must always make sure that the data filled in is accurate and updated.

Credit Rating

Determine if your credit rating is poor - average or strong. Because credit reporting firms and agencies often use different scoring methods - some of the ratings may not be the same. If your business credit report does not provide you the same scoring system - go to the reporting company's Web site - and find out how to interpret your numbers.

Collection Proceedings

In evaluating your business credit report's collection proceedings - find out whether you have a history of letting your bills lapse - or whether some of your accounts have been sent to collection. Remember that some of your late payments could come as a result of other financial issues - or a dispute with your supplier.

Uniform Commercial Code {UCC} Filings

Your company's UCC - or Uniform Commercial Code filing will give you important insights about any leases or liens you have in place. When evaluating this section - find out if you see any clues about how your company uses credit - and find out whether your company' has a number of assets put up as collateral on existing loans - or if your business has a large number of relationships with other business - to determine whether your business may be overextended.

Your business credit report is generally based on the timeline of your payments - and unlike a personal credit report - a business credit report may have a number of active accounts - which can offer a positive effect - as long as your other accounts are in good standing. Your business credit score will also have some information that's self-reported - which is generally not allowed in personal credit reports.

However - your business credit report deserves as much attention as your personal credit report - by finding out how your company's risk level is being rated by the major credit bureaus - you'll have increased confidence when applying for a business loan of financing.