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Six Major Steps for Analyzing Your Business Credit Report

May 27, 2021
Marketing
Credit score

You obtained copies of your business credit reports in order to analyze them. Skimming them briefly, you have a lot of questions. How to begin analyzing these? What do all of the indicators after the credit score mean? What benefits are there from working with this report? Do you have enough coffee to handle this analysis? This article answers these important questions. 

There are multiple different credit agencies which create business credit reports and scores, of which three major ones are Experian, Creditsafe, and Dan & Bradstreet. While these agencies all provide differing information, much of it is similar. The steps outlined below are important for your analysis regardless of which specific report you are looking at. 

Here are six major steps for analyzing your business credit report:

1. Read the report thoroughly. 

It is a common misunderstanding that the credit score is the only part of the report that matters. This could not be further from the truth. Lenders and trade partners will make their decisions and assessment of your business based on information found throughout the report, so you need to read each and every line carefully.

2. Double-check all basic information

Make sure that all details of your business are accurately reported. This includes SIC and NAICS industry codes, and basic information like address, key personnel, and years in business. Sometimes, an entirely different business will have its information on your report and this can affect your business credit score and other key indicators. 

3. Check account information

Your credit cards, tradelines, and some of your supply lines of credit will be listed. Double-check the details. Is the number of accounts correct? Are the balances correct? Is the payment and pay-off history fully updated? 

Call the agency as soon as possible to dispute any faulty information that you find, and follow their dispute resolution processes. It is in their interest also to make sure that the reports that they provide contain accurate and therefore useful information.

4. Check your score and other indicators

The different credit bureaus calculate your business credit score differently, however, they will indicate on the report a credit score and an idea of how healthy that score is. They will also share key factors that went into determining that credit score. 

Common reasons given for a particular score include the payment history, how much access you have to credit, how much your credit is currently being used, and how many tradelines you have open. Read this section carefully, because it will give you clues as to how to most effectively and rapidly improve your business credit score. 

There are also several indicators in a business credit report, beyond the credit score itself, which are critical indicators of your business credit health. Here are some of the major ones that you should understand, and why they are important:

Credit Utilization - This indicates what percentage of the credit that your business has access to is currently being utilized. The lower this ratio, the better. You can improve this ratio by paying off debt, opening new tradelines, or increasing the amount of credit a current tradeline offers. 

Payment Index - This indicates how timely you are in making payments. It goes beyond simply whether or not payments were made on time, to how long it took for you to make any late payments. Clearly, the more timely you are in making payments, the healthier this indicator will be. 

Days Beyond Terms - This indicates the average number of days beyond agreed-upon terms your business takes to pay non-financial accounts. It goes without saying that your suppliers will take a hard look at this number. If you seek to improve this number, opening new supplier tradelines that you pay on time can help. However, keep in mind that not all suppliers report payment history, so make sure that you choose one that does.

Credit Utilization, Payment Index, and Days Beyond Terms are all historical indicators. They look at your company’s actual history and make concrete analyses of what has already happened in your company. 

There are also forward-looking indicators that analyze how your company may do in the future.  Forward-looking indicators may combine your company’s actual history with macroeconomic and other conditions to calculate future probabilities. 

The Aforementioned overall Credit Score is a forward-looking indicator, which looks at future payment activity. A high score suggests that you will pay on time, while a low score suggests potential areas of delinquency. Other forward-looking indicators include the Viability Rating and the Financial Stability Risk Rating.

Viability Rating - This rating uses risk measurements to calculate the probability that a business will no longer be operating in twelve months. 

Financial Stability Risk Rating - This rating indicates the risk of severe financial distress within the next twelve months, such as payment defaults and bankruptcy.   

5. Read other notes and take note of any red flags

The report will have a section that includes potential red flags, such as bankruptcies, judgements or liens. If these are incorrect, make sure to report the discrepancy immediately. Even if they are accurate, see if you can resolve any of them, because these can indicate an above-acceptable credit risk to many creditors and suppliers. 

6. Assess how to work with your business credit report to improve your business

There are many ways that you can work with your business credit report to derive some serious competition-crushing benefits. First of all, identify opportunities that your company may have access to currently based on the credit report. Would a loan help your business invest in expansion of production capacity? What improvements can you make to your business credit in order to access future opportunities? 

Here are some steps that you can take to improve your business credit

If analyzing your business credit report brought up red flags, here is a master negotiation technique that you can use with your suppliers. Address the red flags directly and proactively with potential suppliers and partners. This can help you to overcome any detrimental effect. Furthermore, doing so can build trust, ultimately improving negotiation and business outcomes. Honesty and transparency are attractive assets in business relationships. 


Understanding how to analyze your business credit report has many potential benefits. You can easily manage this analysis without a single cup of coffee if you use Credit Push to help you with the heavy lifting. The first 1000 beta testers will have free access to all beta features for life. Sign up today!


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