Using Business Credit Reports

Use business credit reports to keep track of other businesses and your own

Business owners can glean quite a bit of information about companies, including their own, just by using business credit reports. These reports provide a snapshot of a company's financial status, showing creditors, debts, sales numbers and bankruptcies. In addition, monitoring this information on a regular basis can help you track trends over time.

Small business credit reports can help you when you're trying to decide when to extend credit to buyers, purchase interest in another company, gain a competitive advantage or just check to see how others will view your company. Credit reports for business can provide:

1. Basic company information. Biz credit reports often include annual sales, number of employees and EIN numbers, as well as information about the owners.

2. Risk assessment. In most cases, credit reports for business customers will include a credit score to help determine financial risk. This is similar to a consumer credit rating.

3. Myriad financial information. Business credit reporting usually includes a list of a company's vendors, the amount of debt they are owed and if the company is current or delinquent.

Check your business's credit report annually

Business credit reports are similar to consumer credit reports in some ways, but in many ways, they are not, including the fact that they are not free. Business credit reports are not expensive, however, and owners should periodically check their reports to make sure the information is correct. Since business credit reports are public, ensuring that the contents of your company's report are accurate will help maintain your positive image.

Enroll in a small business credit report monitoring program

A monitoring program usually gives unlimited access to a company's own credit report but also sends out notifications when there is activity. This helps you in a few ways. First of all, knowing what others can find out about you will help you in negotiations. If you know exactly what is in your report, you can be prepared to explain any mishaps and fight for the best credit terms. Also, credit monitoring can help you make sure your company does not become a victim of fraud. Lastly, it will help ensure that your accounts payable department is keeping on top of paying your creditors.

Keep track of other companies with business credit reports

If you're a manufacturer or wholesaler, it's a good idea to check out a buyer's financial status before extending credit terms. You can also use this information to set your terms, if you choose to offer credit. By running a credit report on another company, you can find out if it has any delinquent accounts, judgments, bankruptcies or liens. You can also see its sales figures and some other company information.
  • Business credit report information is also useful for keeping track of your competitors. Since you can track a company's payments to creditors, you can estimate a company's health. For example, if your closest competitor is getting further and further behind on its payments, you may want to consider offering a buyout deal and gain the market share that that company currently occupies.

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