Equifax is most commonly associated with personal credit scores, but the agency also provides credit scores for small businesses. Instead of reporting a single score, Equifax reports three different business credit scores: Payment Index Score, Business Credit Risk Score and Business Failure Score.
What Goes Into an Equifax Business Credit Report?
When determining a business’s Credit Risk and Failure Scores, Equifax evaluates payment trends, credit history, public records and firmographics. For the Payment Index Score, Equifax looks at a business’s payment history for the past year. Equifax uses public and trade records as well as data from the Small Business Finance Exchange, non-profit organization of small business lenders across the U.S.
Equifax will analyze at your business’s payment history and habits as well as any outstanding balances your business has with creditors and vendors. This includes days beyond term, your business’s worst payment status on all trades in the past two years and evidence of any nonfinancial transactions (i.e., payments to vendors) being delinquent or charged-off for two or more billing periods. To maximize your chances of getting a good score, you should be consistently paying your vendors and creditors on time and in full. Making late payments, especially if they are more than 30 days late, will have an adverse impact on your scores.
The credit bureau will also consider your business’s credit history, including the length of time since your business’s oldest financial account was opened, number of credit inquiries and credit utilization. Having a longer credit history suggests your business is lower risk, so this will help to improve your score. It’s also better to not have many recent credit inquiries, as opening several credit accounts in a short time period makes your business riskier to lenders.
Finally, you should aim to keep your current credit utilization on the lower end. This means that if you have a $100,000 line of credit, you should aim to use no more than 30% to 40%, or $30,000 to $40,000 at any given time. If you find yourself using more than that on a regular basis, you should try to reduce your spending or get an additional loan or line of credit to lower your utilization.
Like other credit agencies, Equifax will also look at any negative public records associated with your company, including judgments, liens and bankruptcies. Ideally, you wouldn’t have any of these derogatory public records associated with your business. If you do, it’s better if they aren’t recent or frequent and if the dollar amount associated with each is low.
Your company’s demographics, including size, industry and age, will also play a role in Equifax’s scores. The reason Equifax looks at number of employees, age and industry is that businesses behave differently and present different risks based on these factors. Older businesses typically pose less risk to lenders, so having a mature business will benefit your score. Equifax will also compare your Payment Index score to the industry median.
What Do Different Scores Mean?
Instead of reporting one score, Equifax reports three business credit scores: Payment Index, Business Credit Risk Score and Business Failure Score. The Payment Index ranges from 0 to 100 and is based your business’s payment history from the past year. Your average “days past due” are the key driver in this score. If you typically pay on time, your score will be between 90 to 100. If you are one to 30 days past due, your score will be between 80 to 89.
|Payment Index||Days Past Due|
|90 - 100||Paid as agreed|
|80 - 89||1 - 30 days past due|
|60 - 79||31 - 60 days past due|
|40 - 59||61 - 90 days past due|
|20 - 39||91 - 120 days past due|
|1 - 19||120+ days past due|
The Business Credit Risk Score indicates the likelihood that your business will incur a 90 day or more delinquency or charge-off over the next year. The score ranges from 101 to 992, with a higher score indicating lower risk. A score of 566 or above is considered acceptable to good. A score of 0 indicates that your business has a bankruptcy on file. The Business Failure Score predicts the possibility of your business failing over the next year, whether informally or formally through bankruptcy. Scores are set from 1000 to 1880, and similar to the Credit Risk Score, higher scores are better and a score of 0 indicates a bankruptcy on file for your business.
Where to Get Your Equifax Business Credit Report
You can purchase a single report on Equifax’s website for $99.95 or purchase a pack of five reports for $399.95. Similar to other agencies, Equifax also offers paid credit monitoring services for $5.99 per month, allowing you to track changes to all three scores as well as any new credit or public record activity. If you see any incorrect information your credit report, it’s your responsibility to dispute it with Equifax by submitting a claim through their online member portal. You may be required to provide supporting documentation. You can see a sample Small Business Credit Report here.