Business Reports Overview

Hello, and welcome to this module, Business Credit Reports Overview. So this is going to be really, really great because I’m going to break down now. Since we’ve done a lot of the foundational steps that create our business, make a credit optimized, all that good stuff, establish our business. Now we’re going to go ahead and start getting the reports that we need to start building out. So the first thing I’m going to cover is what our business credit report, or what are the business credit report bureaus. I’m also going to get into the Big Four Business Report Bureaus. Really the big two, but I’m going to outline all four of them. Intro to Business Credit Bureaus. And then, How is the Dun & Bradstreet Paydex Score calculated. And I’ll go into more detail in another module in this particular section. Okay? So Business Credit Overview, Business Reports Overview, I should say.

So when it comes to Business Credit Report Bureaus, you’ve probably already heard about Experian, Equifax and TransUnion from your personal credit score. However, Dun & Bradstreet may be a new name to you. It may not be a new name to you, but Dun & Bradstreet is the 800-pound gorilla when it comes to business credit reports. And there are four main business credit reports that have their own scoring systems in credit reports. And collectively these are going to make up your corporate credit file. And this is what the lenders are going to use to analyze when determining your creditworthiness for your company. So this is why we did all that work on the front end before we even started attempting to establish business reports and make sure that our business has the correct structure in place before. So we don’t draw any red flags or get any inaccurate data about us. Now, Dun & Bradstreet is going to be the number one business credit reporting system.

And it really accounts for about 85% of all business credit reporting in the market. And it’s by far the biggest of all the credit bureaus, when it comes to business credit reports. Now the next one is going to be Experian Business or Experian Intelliscore. So this is a second business and it has about 13% of all business credit reporting market share. And generally speaking, we’re going to want to make sure we’re really establishing the first two. Now the last two is Equifax and TransUnion. So Equifax is the third largest largest player. It has a small, but it does have an important, important business credit reporting market share. And then TransUnion, in my opinion is pretty much non-existent. They have a small business apartments. They claim to be a player, but they’re there. They aren’t really, so the big ones we’re most concerned with is Dun & Bradstreet.

And the number two is Experian Business. Equifax and TransUnion, we’re gonna, we’re probably never going to establish the TransUnion wasn’t in full transparency. I don’t even have a TransUnion report that I’ve established. But I do have the, I do have the first three. Okay. Now, when we go into the business credit report, everyone almost always knows about Experian and Equifax from their personal credit reports, because those are really familiar with us, even though Equifax on the business credit reporting side, isn’t as large as it is on the personal side. While Dun & Bradstreet, this like I’m saying is the main one. So these three are the primary three credit bureaus that we want to make sure we’re building up our corporate credit and having our really good scoring system with. And I’m going to explain how those, those scoring systems work.

So collectively these reports are going to make up the majority, if not all of the corporate credit profile that your lenders are going to use to analyze and determine your company’s creditworthiness. So I’m going to break down how each one of these credit bureaus works in this particular module. So stay tuned. So Dun & Bradstreet is or better known as D&B is the largest making up 85%. Like I was saying of all market share for business credit report. And then it’s easy to establish, and maintain a credit file with. So the easiest one to establish a credit file with, and it’s easy to maintain. So the first step is going to be acquiring a DUNS number and then establishing a Paydex Score. You must have five trade accounts on your profile. And the score is going to range between 0 to 100.

And I’m going to show you guys step by step, how to do this. Now, the point is we want to start before we even start attaining additional credit, this is gonna be the starting point. So the majority of vendors and suppliers that we’re going to recommend when we start building up our credit profile are going to use Dun & Bradstreet to determine your creditworthiness. And then they’re going to start with those net term accounts, landlords checks, D&B, and all this good stuff, lease agreements, even business loans are going to be used for Dun & Bradstreet. So .everything dealing with your business is going to have a D&B number or be viewed as Dun & Bradstreet If you want to separate your personal. So not to worry. I’m just gonna, I’m gonna explain all of this to you. Now. Experian is the second largest, and it’s also the most accessible.

It’s just not initially. So once you have an Experian report, it’s going to be, it’s going to report, but you’ve got to create it. So create a corporate credit file with Experian isn’t free, but it’s passive. It’s not initiated by you. You, you’ll need to get a copy of your credit report and make corrections like with your personal credit report. And then Experian is used primarily by banks and their secondarily by credit card companies you know, equipment leasing companies, vendors, and non-traditional lenders that are gonna determine your creditworthiness. So we definitely want to have an Experian credit profile, especially like I know American Express. They use them all the time,. Chase, I know they use them. So we want to have that Experian report taken care of. And I’ll show you guys how to get that established. Now when we look at our Experian business credit reports, it’s just like Dun & Bradstreet’s.

So it’s going to, it’s going to range between 0 at the lowest and 100 at the highest, because that’s how the scoring algorithm works for business credit, but they’re a little bit different than a Dun & Bradstreet’s Paydex Score and Equifax’s Payment Index. Because Equifax is a payment index, not necessarily a score. So what Experian does is to calculate corporate credit score based off the information supplied by its vendors, lenders, creditors, legal filings, and then independent sources like public records, and then also collection agencies. All that this is going to be accounting for your Experian report on the corporate side. And it’s going to make all of these factors in terms of history, size, age of business, outstanding balances on loans, active liens, judgments, or past bankruptcies on record. And a newer business will be assigned a medium to low risk, even when using credit responsibly, because it’s easier for a business with a well-established credit history to obtain a lower risk rating.

So that’s just kind of like an FYI to know. Now, Equifax I’ll cover it. So that way it’s clear. So Equifax is most difficult to establish when you’re trying to establish and maintain a credit file. It’s very difficult to establish an Equifax for the file and then creating an Equifax for the file. Creation is passive. So it will take longer than Experian because of criteria for who can report is much more stringent. And then once you file as established, however, you can purchase a report and make corrections. And Quebec Equifax is primarily used by cash lenders, such as banks. All right, now, any of these three lists or any of these free bureaus can be used for any type of lender. And sometimes all are used for lending by different vendors. But generally speaking, like I’m saying D&B or Dun & Bradstreet is going to be the primary source for your net term accounts and then Experian for credit cards and Equifax for cash loans.

So that’s essentially how you want to look at this. So when we’re doing our Tier 1 or Tier 2, or Tier 3 accounts, which you’ll learn about. We’re going to be using Dun & Bradstreet. And we’re going to our credit cards, we’re going to be using Experian. And then those cash loans are going to be Equifax. Now, when we look at how the Dun & Bradstreet Paydex Score is calculated. I briefly explained how it was calculated for Experian. I’ll go into more detail on the Dun & Bradstreet profile. But it’s unlike your personal FICO score. This score is purely a measure of your company’s payment history, and whether a business pays his bills on time. Again, paying your bills on time is huge, which is why I talked about the wealth triangle and creating cashflow. Now, other components such as utilization of your credit and length of credit history, number of inquiries, credit mix, and the amount of new credit, etc are not calculated into the D&B.

Paydex score. The Dun and Bradstreet report shows these things so that the lender can see them. But they’re not a part of the actual Paydex Score. This is so important to understand. So when you look at the Paydex Score formula, you have to look at that dollar way that average. More weight is given to larger payments than smaller ones. So when it looks at, when you look at your Paydex Score, 0 to 19 being the lowest payment comes over 120 days, late beyond terms, and then a hundred being at the highest payment comes 30 days sooner than terms. Essentially what they’re saying is in order to get that hundred, you want your, you want to be paying your debt. You bills 30 days ahead of time, 80, 80 Paydex Scores, really having, you know, you’re paying your bills at the terms this agreed upon.

So if you do a net 30, which I’ll cover, that means you’ve been given 30 days to pay that bill, and then you pay it off within that 30 day timeframe. And then anything below 80 means you’re paying your bills beyond the terms that you agreed upon. Which does not look good, and it’s going to lower your Paydex Score. So simply paying your bills on time. Well, within the terms is going to give you an 80 Paydex Score, paying your bills ahead of time is going to get you way up to that 100 Paydex Score. So that’s really, really important to understand. So when you look at your Experian Intelliscore Plus, so that’s really basically for Experian. This is going to be your Experian business credit risk score, and it’s going to predict the risk of a business being seriously delinquent over 90 days, late or in a bankrupt status within the last 12 months. The score is going to also range between 0 and 100, and it has a complex scoring system, more like personal credit scores, then Dun & Bradstreet simplicity.

And it’s based off over 800 variables. Okay. And so it’s really, really much more complicated, the D&B’s. Now it has a potential score percentile score, and it’s going to rate the business against all other businesses. And then an example score means like, if you have an 80, this means your business ranks higher than 79% of all the other businesses and lower than 20% of all the other businesses, as an example. So currently, as of the recording of this video, I think I have like a 75 or 76. So that means I’m better than 74% of businesses in 75% of businesses. And there’s 24% or 25% more businesses that have higher reports as the mind. Now we look at Equifax Credit Risk Score. This is how this is going to basically work is going to predict the risk of a business being seriously delinquent, very similar 90 days to 120 days of bankrupt in the last 12 months. Score is going to range between 0 to 100 and has a complex scoring system, more like Experian Intelliscore. Then the Paydex Score.

And then Equifax Credit Risk is based off of a few things. Number one, the score is risk of a measure of the weather of the business is going to pay his bills on time, more like the Paydex Score than IntelliScore. And then Equifax credit score formula works like this. So payments made as agreed, 0 to 90 days and above. Payments, 1 to 30 days, late 80 days and 89 days, payments 31 to 60 days, late 60 to 79. So that’s essentially what I’m saying. payments 61 to 90 days late is going to get you a score between 40 to 59 and then payments 91 to 120 days late is going to give you a 20 to 39 and then payments late one 20 days is going to get you 1 and 19. So you don’t want to have that. You want your scores to be higher. So payments as agreed, meaning we want to make sure we’re paying our bills on time 90 days and above. I mean, paid as agreed. We want to have a 90 and above. All right? So these are our business credit reports overview. In the next section, I’m going to be covering how to set up our NAV profile, which is going to be the mothership of this entire business credit report monitoring system. See you on the next module.