experian (TM) BusinessCreditFacts
Home | FAQ | About us | Contact us | My business credit | Score Planner | Privacy
Common Questions and Answers

Choose a Topic


General business credit report information


Benefits of a good business credit score


Just starting or establishing a business


Building or improving business credit


Small business lending


Business fraud and identity theft


Resources and statistics


B2B credit services


Business credit data


Business credit score


Data reporting / contributing


ContractorCheck reports


Other




Answers


What is a business credit report and why is it important?
A business credit report is used to present a current, objective picture of how a business manages its financial obligations. Information in Experian's business credit reports is either from a 3rd-party source or is 3rd-party verified. As such, this information is reliable and non-biased allowing for an objective view of a company's overall financial health.

Back to top



Does my business have a credit report?
Experian requires minimum information to generate a business credit report and score. If a business doesn't meet the requirements, a credit report and score is not generated. Minimum information is at least one tradeline and/or one demographic element.

You can search Experian's database to find out if your business has a credit profile by going to SmartBusinessReports.com. You don't have to be registered to locate a company in our database. Non-members interested in purchasing a report will automatically be directed to register.

Back to top



Can I look at business credit reports on other companies that are not my own?
Yes. No approval is needed from a business owner to order a business credit report. Unlike personal credit reports which are regulated under permissible purposes only, commercial business credit reports can be ordered as often as you wish and for any purpose.

Back to top



What will a business credit report tell me?
Experian's report provides understandable business credit information, including comprehensive demographic, financial and public record information, as well as analytic scores.

  • Credit: number of trade experiences, balances outstanding, payment habits, credit utilization, trends over time
  • Public records: recency, frequency and dollar amounts associated with liens, judgments, bankruptcies
  • Demographic information: years on file, Standard Industrial Classification (SIC) code, business size

Back to top



How do I get a business credit score and report?
SmartBusinessReports.com provides access to Experian's business credit database. Signing up is fast and easy. You sign up by clicking on the Member Login link located on the top of most SmartBusinessReports.com pages and following the Create Account link. To get started click here.

Back to top



How can I improve my business credit score and report?
Your business credit score is one of the first things lenders, suppliers and even some customers look at before deciding to do business with you. A poor credit score can make it difficult, or even impossible, to get funding and obtain lines of credit for your business.

The first step in improving your score is to become aware of the factors that drive your current business credit score and report. By managing these more effectively, you can make a positive impact on your credit score, which can lead to more opportunities to grow your business.

SmartBusinessReports.com Business Credit Advantage package – a business credit monitoring service – gives you unlimited access to your business credit report and score so you'll always know what's in your business credit profile and be able to make it work to your advantage.

Back to top



Can't I just use my personal credit?
It's true that many small business owners fail to separate their business expenses from their personal expenses. The credit card used to take the family out to dinner also gets used to gas up a company vehicle or to pay for supplies used by the business. Half of all small businesses use some form of personal credit to finance their businesses.

However, the weakness of relying solely on personal credit is clear. If your business ever becomes at risk, your personal credit score becomes at risk as well.

Additionally, many creditors today are moving away from relying on personal credit alone when judging the financial health of the owner's small business. Personal credit is considered in the industry not ideal in predicting business behavior. Furthermore, smart creditors are taking advantage of new blended commercial scoring tools that integrate both personal and business credit attributes to assess and predict small business risk.

Back to top



What type of information can be found in a business credit report?
A business credit report presents a current, objective picture of how a business manages its financial obligations. It can include:

  • Actual trade payment experiences
  • Public record information
  • Company background
  • Collections information
  • Comparative data placing a company's payment performance in context with its industry
Much of the information displayed on a business credit report comes from actual businesses like yours, providing us with their accounts receivable information. As such, the information is reliable, accurate and non-biased, allowing for an objective view of a company's overall financial health.

Back to top



What is DBT?
DBT or ‘Days Beyond Term' is a dollar-weighted average number of days beyond the contractual due date that a business pays its bills based on tradelines that have been updated in the previous 3 months. DBT is calculated at +30 days, so a DBT of 5 means that a customer is paying, on average at 35 days after invoicing. Experian's business credit reports display the DBT for the business being reported on as well as the industry-average DBT.

Back to top



What does "continuous trades" mean?
Continuous trades are existing tradelines that have been updated in the previous 3 months. DBT, quarterly DBT and monthly DBT are calculated on continuous tradelines.

Back to top



What are UCC filings?
UCC filings or ‘Uniform Commercial Code' filings are required whenever a company pledges assets as collateral against a loan. Experian's business credit reports lists up to the 10 most recent UCC filings (original, amendments or terminations).

Back to top



How long does data stay on file?
Experian uses standard industry and government guidelines for keeping data on file. Expiration dates for data ensures that the information presented in a report is current enough to create an accurate picture of financial health.

  • Trade Data: 36 months
  • Bankruptcies: 9 years and 9 months
  • Judgments: 6 years and 9 months
  • Tax liens: 6 years and 9 months
  • UCC filings: 5 years
  • Collections: 6 years and 9 months
  • Bank, Government & Leasing: 36 months
  • Inquiries: 9 months

Back to top



Can business credit reports save my business money?
By reviewing public records and other business information, companies save every year on the cost of acquiring new businesses and managing liability and potential fraud. Reviewing public records and other business information also establishes sound business relationships that can extend for years.

Back to top



Where does Experian get its information?
Experian collects credit obligation information from thousands of businesses nationwide. These businesses are typically the suppliers and lenders with which a company has existing financial relationships.

Experian also collects legal filings from the various local, county and state courts across the United States. Company background information is collected from a variety of independent firms. Experian does not display information directly from a company about its business, unless that information has been verified.

Back to top



What data sources are used in Experian's business credit reports?
Experian business credit reports combine information from sources including actual trade payment experiences submitted by payees, public record information, collections information, company background and comparative data placing a company's payment performance in context with its industries.

The following are a few examples of the agencies and entities that data is pulled from: state filing offices, public records, credit card companies, collections agencies, Corporate Financial Information and marketing databases.

Back to top



How can I verify my own business data?
You can check to see if Experian has your business in our database directly from this site, plus verify and request a correction to your business information, if necessary. Click here to begin the process. You must be the owner or a corporate officer to suggest changes to business information, and may be asked to verify your identity prior to submitting a business update request.

Back to top



What are public records?
Business public records are records of actions or incidents filed or recorded with a government agency for tax and other regulatory requirements. These records are made available to the public to protect the interest of the filer.

Back to top



How do businesses benefit from using public records to make business decisions?
Financial services, insurance, real estate, contractors, legal and professional services, staffing agencies, telecommunications, transportation, Fortune 1000 companies and small businesses use public records to reduce business credit risk and manage liability and fraud.

Back to top



Why is it important to monitor my business credit report?
There are four important reasons to monitor your business credit report:

1. Avoid unpleasant surprises: Your business credit profile is often the basis for decisions others make about your company. It is used to determine how much money lenders will loan you, how much credit suppliers will extend to you, what interest rates you'll be charged and what you'll pay for insurance premiums. That's why it's important to know what's in your business credit report and monitor it for accuracy and changes.

2. Protect your business: Business identity theft and fraud losses cost American companies billions each year. Both can negatively impact cash flow, cause problems with creditors and suppliers, and even affect your business's reputation. A great way to help protect yourself and your business is to regularly check your company's credit report for unusual activity that might indicate fraud.

3. Correct mistakes: Your credit report paints a picture of your business for the world to see. Out-dated or incorrect information can give the wrong impression about your business resulting in unfavorable decisions that negatively impact your bottom line. By keeping track of your business credit report you can identify inaccuracies and request corrections.

4. Build your score: A poor business credit score can make it difficult, or even impossible, to get funding and obtain lines of credit for your business. The first step in improving your score is to become aware of the factors that drive your current company credit score. By managing these more effectively you can make a positive impact on your credit score, which can lead to more opportunities to grow your business.

Back to top



Is the use of the business credit reports regulated?
Business credit reports do not use consumer data, so there is no regulation associated with it.

Back to top



Does a business credit score use the same ranking scale as my personal credit score?
Like personal credit scoring, business credit scores provide a quick view of risk potential based on where the score falls on the scale - the higher the score, the lower the risk. However, business credit scores use a scale that range from 0 to 100.

Back to top



How is a business credit score determined?
Experian's Credit Ranking Score is determined through a statistically derived algorithm that determines risk based on multiple factors:

  • Credit: number of trade experiences, balances outstanding, payment habits, credit utilization, trends over time
  • Public records: recency, frequency and dollar amounts associated with liens, judgments, bankruptcies
  • Demographic information: years on file, Standard Industrial Classification (SIC) code, business size

Back to top



Does checking my business credit report multiple times affect my business credit score?
Checking your business credit report does not affect your business credit score. Pulling your own business credit report is considered a soft inquiry. Soft inquiries do not affect your business credit score, and they are not revealed to potential lenders or creditors.

Back to top



What steps can I take to build capital for my business, and what type of lending sources should I consider?
Capital is the lifeblood of a business and every entrepreneur needs to have a plan for obtaining it. The problem often found is that most entrepreneurs don't start thinking about obtaining capital until they need it, which is typically too late! Regardless of the stage your company is in, you need to have a plan for how you will fund its growth.

As you plan your business funding needs, consider multiple lending sources. The most obvious source is a bank, but that doesn't mean that banks are the only capital source. You should have a portfolio of business capital that is a mix of bank loans, lines of credit, business credit, credit cards, and so forth.

One alternative financing source is business credit (also referred to as trade credit). Business Credit is an area of financing that every entrepreneur needs to be aware of and focus time in establishing. Without spending dedicated time and resources to building the company's business credit the entrepreneur is missing out on the single largest source of lending in the world.

In addition, by building business credit a company is establishing a presence with the business credit bureaus, like Experian, which help in obtaining credit in the future from banks and other lenders who report their data.

Written by:
David Gass, President & Founder
Business Credit Services, Inc.

Back to top



What can I do to help make my new business financially stable?
Think of capitalizing your business as digging a well. The wise business owner won't dig a well that only satisfies short-term needs, but will dig the well as deep as possible or at least lays that groundwork for doing so. At a high-level, there are at least five layers of your businesses financial well.

It starts with the personal assets of the principals. This is the most commonly used, but not necessarily the best source of all the business's needs. The use of leverage in using other people's money (OPM) is typically the best approach for funding most of the business's needs.

The second layer is the 3Fs: Friends, Family and Fools, another commonly exploited source of funds.

The next three layers are: credit, loans and investors. While there should be some order to this, usually new business owners are all over the place when it comes to the deeper layers of the well, and they can find themselves getting lost in the process or they waste time going after funding that they are unprepared for. The biggest tragedy is when business owners wait until it is too late to look for capital. They usually end up out of luck. The reality is no one wants to give you money if they know you need it. Your best bet is to dig your well, when you don't need the water.

Written by:
David Gass, President & Founder
Business Credit Services, Inc.

Back to top



What factors should I consider when evaluating sources of capital?
The most important lesson when looking for capital and credit for a business is to understand that all money is NOT created equal. As you look at sources of capital for your business you need to consider:

  • 1. Debt/Equity – Any capital that you receive is either going to be debt or equity. Equity requires a business owner to give up ownership in their company. Debt does not require giving up ownership in the majority of cases. You need to be clear on what type of money you are obtaining. For the most part, banks and businesses deal with debt, and investors deal with equity. Equity gives the investor a percentage of future profits. So while it may feel like free money, this is the most expensive capital you can get for your business (if you are successful!).
  • 2. Control – Does the money reduce your control? Bringing on investors or partners will lessen your control. A lender may request financial oversight or independent audits. You need to be aware of what you are giving up.
  • 3. Security – How is the lender or investor securing the money? Are you personally guaranteeing it? Is there a blanket lien on your assets? If you default who are they going after for repayment?
  • 4. Transferability – Can you transfer the capital to the next business owner? In other words, is the capital for you or is it for the business? It won't do you much good to sell a business if all the working capital is still tied to you.
  • 5. Ease of Attainment – How easy is it to get? How much time will you need to invest in order to secure the capital that you need?
  • 6. Team – Are you adding players to your team that are invested in your success? Sometimes bringing on investors and surrendering control is exactly what you need to do and in other cases is the furthest from where your business needs to be.
Written by:
David Gass, President & Founder
Business Credit Services, Inc.

Back to top



Why is it important to establish a business credit report separate from personal credit?
As an entrepreneur, did you know you have a unique opportunity to build, maintain and acquire credit both individually and as a business owner? That's good news if you're trying to build and grow a small business because you won't have to rely solely on your personal credit to do that.

It is estimated that fewer then 10 percent of all entrepreneurs know about or truly understand how business credit is established and tracked, and how it affects their lives and businesses.

Let's take a look at how personal credit differs from business credit.

Personal vs. Business Credit

At the point an individual with a social security number accepts their first job or applies for their first credit card, a credit profile is started with the personal credit reporting agencies. This profile, otherwise known as a credit report, is added with every credit inquiry, credit application submitted, change of address and job change. The information is typically reported to the credit bureaus by those who are issuing credit. Eventually, the credit report becomes a statement of an individual's ability to pay back a debt.

The same is true for businesses. When a business issues another business credit, it's referred to as trade credit. Trade, or business, credit is the single largest source of lending in the world.

Information about trade credit transactions is gathered by the business credit bureaus, such as Experian, to create your business credit report using your business name, address and federal tax identification number (FIN), also known as an employer identification number (EIN), which you get from the IRS. The business credit bureaus, such as Experian, use this compiled data to generate a report about your company's business credit transactions. In many cases, those issuing credit to you will rely on your business credit report to determine if they want to grant you credit and how much credit they'll give.

The mistake many business owners make is using their personal information to apply for business credit, leases and loans. By doing so, they risk having a lower personal credit score.

At the same time, by using their personal credit history to get business credit, they're not able to build their business credit score, which could help them attain critical business credit in the future.

The key to establishing a business credit profile and score is to find companies that will establish credit for your business without using your personal credit information and then report the payment experiences to the business credit bureaus, like Experian. By reporting the information to the proper agencies, they'll help you establish your business credit profile.

Written by:
David Gass, President & Founder
Business Credit Services, Inc.

Back to top



What steps can I take to establish a business credit report and score?
The following are the basic steps you need to take to establish a business credit profile and help build a business credit report and score:

1. Form a corporation or LLC to operate your business under and obtain an FIN or EIN from the IRS. You can apply for an EIN number at the IRS website. Forming a corporation or LLC as opposed to structuring your business as a sole proprietorship or partnership has benefits. Corporations and LLCs afford business owners liability protection, and you can build a business credit profile that's separate from your personal debts. You may be able to apply for credit under your business's name and obtain credit without a personal credit check or guarantee if the credit grantor will do so.

In addition, as a sole proprietor or partner in a partnership, you're personally liable for the debts of the business and all your personal assets are at risk in the event of litigation.

2. Comply with the business credit market requirements. It's extremely important for businesses to meet all the requirements of the credit market in order to ensure a higher likelihood of credit approval. In fact, not being in compliance with the credit market can raise red flags with both credit bureaus and grantors. The red flags include such simple things as not having a business license or a phone line. Most businesses will not grant credit to another business that hasn't taken the steps to set the company up with the proper licenses and local, state and federal requirements.

3. Prepare financial statements and a professional business plan. These documents are often required by many credit grantors.

4. Find companies willing to grant credit to your business without a personal credit check or guarantee. When a company grants your business credit, be certain they report the payment experiences you have with them to the business credit bureaus, like Experian, to help build your business credit report and a financial foundation for your company.

5. Manage your debt so you don't fall into trouble making your payments, which will negatively affect your business credit score. It's important to monitor your business credit report for changes, especially when you are building a business credit profile.

6. Make monthly payments to credit grantors to keep your business credit profile active.

At some point, almost every business needs some type of credit. To avoid having to use your personal credit history or guarantees and to obtain the best possible terms, start the steps necessary to build a business credit profile now before you really need it.

Written by:
David Gass, President & Founder
Business Credit Services, Inc.

Back to top



How does the current credit economic condition affect my small business?
As banks look at their bottom line from the recent mortgage issues, there has been a ripple effect that reaches to small business owners.

The Federal Reserve surveyed U.S. banks and found that one third of them have recently tightened their lending standards for loans to small businesses. The Fed data shows that many lenders, nervous about their bottom line, have increased their credit standards for small business loans at a rate not seen since September 11, 2001, making it harder and more expensive for small businesses to get loans.

In addition 80% of U.S. banks have tightened loan requirements for commercial real estate purchases as well.

With the banks tightening their credit requirements entrepreneurs need to explore other strategies for finding the capital they need. One of the most important tools for small business owners is business credit, also referred to as trade credit. Trade credit is the single largest source of lending in the entire world. If you aren't using this source of credit you are stifling your ability to grown your company and surpass your competition.

Business credit or trade credit is when one business provides a service or sells a product to another business on credit terms. The business buying the service or product does not need to pay for the transaction up front but rather has terms to pay either monthly with interest or better yet in 30 or 60 days without interest. In fact in most net 30 terms they will provide the opportunity to pay early with a discount.

Written by:
David Gass, President & Founder
Business Credit Services, Inc.

Back to top



Can a personal guarantee on a business line of credit be avoided?
As a business owner starting and growing a business you will find that almost everyone you work with on a lease, loan or line of credit is going to ask for a personal guarantee. At least they should. Think about it from the creditor's point of view: "If I can get the business to guarantee to pay me back and someone individually, the likelihood I'm getting paid is much greater." Makes sense.

As a small business owner you may not want to provide personal guarantees because you don't want to be on the hook for the debt in case something happens to your business. You want to separate the business life from your personal life. However, creditors are always going to ask. So what do you do?

You will find that in order to obtain credit from anyone without a personal guarantee there is one thing that your business has to have in order to get approved on its own, that is to be in compliance with the lending markets. Compliance is a critical step that must be taken for your business in order to even think about not providing a personal guarantee.

Not being in compliance with the credit market can raise red flags with both credit bureaus and grantors. The red flags include such simple things as not having a business license or a phone line. Most businesses will not grant credit to another business that hasn't taken the steps to set the company up with the proper licenses and local, state and federal requirements.

The second thing you can do is to negotiate. You need to be willing to negotiate and willing to walk away from a deal.

Bottom line, if you don't want to provide a personal guarantee there are circumstances where you can avoid them. There are some circumstances however where they are required, and you have no way of avoiding them. So pick your battles of when you should and shouldn't provide a personal guarantee. There are times when it's necessary and other times when its not. Determine how important the loan, line or lease is to your business, then you can decide if a personal guarantee is required.

Written by:
David Gass, President & Founder
Business Credit Services, Inc.

Back to top



I am a creditor and/or supplier. Why should I report my accounts receivable data to Experian?
Reporting the payment behavior of your commercial customers works to build the business credit of those who pay you on time. It also acts as a consequence to those who do not pay per their terms.

Back to top



As a supplier, if I report payment behavior data to Experian could competitors steal my customers?
It is not possible for your competitors to steal your customers. Experian maintains strict confidentiality standards designed to limit access to, verify the integrity of and secure the privacy of new business information. Your company name is never displayed on a business credit report or revealed to other clients when they access Experian's business credit reports and products. We display only a general description of your industry. So your competitors can't target your customers or identify existing relationships.

Back to top



What's in it for me if I report my account receivable data to Experian?
By simply reporting your commercial accounts receivable information, you can minimize the occurrence of late payments or defaults in your account base.

Here is a list of ways you benefit from reporting:

  • Better leverage debt collection — Customers who know that you are reporting payment behavior to Experian are far less likely to default on their debt.
  • Growth — By sharing your customers' trade payment experience with your fellow credit managers, you can help ensure the growth of your company and of the business community as a whole.
  • Access to Experian's Management Reports — Experian's Management Reports will identify customers who are late paying other vendors and who still may be current with you, which will help you minimize your risk on future sales.
  • Product discounts — Receive discounts on other Experian business credit solutions.

Back to top



As a creditor or supplier, how can I report my data to Experian?
Experian offers business credit data reporting through the Internet via Secure HTTP. Experian utilizes Connect: Enterprise, a tool that manages the intricacies of sending or receiving data securely and reliably over the Internet. Experian encrypts the transfer session using Secure Sockets Layer (SSL) technology, the Internet security standard.

If you are a creditor or a supplier, you may learn more about reporting business credit data through the Internet and obtain a user ID and password. To get started, please contact your authorized Experian reseller or Experian directly at 800 478 0650.

Back to top



How can I build my business credit report?
Just like your personal credit report, Experian only accepts company credit and payment history from creditors and suppliers. If you would like to see your creditors or suppliers report to Experian so your credit and payment history is displayed on your business credit report, please write your supplier a letter of request. Experian BusinessCreditFacts provides you with the tools to easily do this. Visit our supplier page to access our letter template.

Back to top



What do I do if there is incorrect information on my business credit report?
If there is incorrect business demographic information on a report, you can submit a request for updates using this site. Simply view the Update My Business Information page.

If you need to dispute certain details on your business credit report, please write Experian Commercial Relations by following the instructions below.

Please provide all of the following:

  • On the report, circle the specific items in question and provide the correct information. Please provide supporting documentation when available.
  • On current company letterhead, list all variations of company name including any doing business as and any formerly known as names that your company has operated under for the past 10 years.
  • List your company's current and previous addresses (including physical and PO Box addresses) for the past 10 years.
  • Provide the signature and phone number of an officer of the company.

Please send this information to:
Experian — Commercial Relations BCF
PO Box 5001
Costa Mesa, CA 92628-5001

Or email your Adobe® PDF file to:

Back to top



I have a contracting / construction business and understand there is something called a ContractorCheck report. What is the relationship between a business credit report and a ContractorCheck report?
A business credit report is a detailed reporting of a company's credit report history. A ContractorCheck report is a summary view of financial stability designed for consumers to make more informed hiring decisions on potential contractors for their home improvement projects. The contracting business's credit report detail is used, but not displayed in full, to create Experian's summary ContractorCheck report and rating.

ContractorCheck Pro is a combination report package that enables home improvement professionals the convenience of accessing their ContractorCheck report and their detailed business credit report together, with a full year of business monitoring to proactively manage their business profile. To learn more, visit www.contractorcheck.com.

Back to top



As a home improvement contractor, can you tell me how the overall ContractorCheck rating on my business is determined?
Experian compiles a score of points to determine your overall ContractorCheck rating. Among items that give you points are the presence of License, Bond, and Insurance information. If this information is not listed on your business credit report, you should go to the update section of this site to request an update to your Experian business credit profile. Items that can negatively affect your score are delinquent or past due credit items. To see a full copy of your Experian online business credit report, visit SmartBusinessReports.com or go to www.contractorcheck.com to view both your business credit report and ContractorCheck report in one easy to read layout.

Back to top



What you should know about your business credit.
You've got a great idea and the capital and know-how to make it happen. But entrepreneurial success also depends on something else many small business owners don't pay enough attention to: the business' credit.

"Just as your personal credit has a big impact on your financial health, your business credit can help you get competitive business loan rates and terms from potential suppliers," says Marc Kirshbaum, former president of Experian's Business Information Solutions group. "Having complete, up-to-date information on your business credit report and a good business credit score is the best way to obtain favorable financial terms."

The current economic climate makes it more important than ever for small business owners to know their business credit score, Kirshbaum adds. Small businesses, which often have challenges managing cash flow, are especially vulnerable to economic changes. A strong credit score can help small business owners access additional capital during difficult times.

Don't assume that your favorable personal credit score will be enough to secure a good business credit score, either, Kirshbaum cautions. While lenders and vendors may initially consider your personal credit history, once your business pays its first bill, it will begin building its own credit history. Here are some basic facts every small business owner should know about business credit ratings:

Business scoring is much less regulated than consumer credit scoring. The process of scoring your business is much more complicated and less clear than the consumer scoring process.

Just because you have a business, don't assume you have a business credit score. Credit reporting companies require a minimum amount of information before they can generate a report and score for your business. To establish your business credit history, encourage vendors to report your payment history to one of the major credit reporting companies. Many credit reporting companies can provide you with information on suppliers who report to them.

Don't rely on your personal credit rating to finance your business. If your business becomes at risk, so will your personal credit score. Keep in mind that many creditors are now looking at scoring tools that consider both personal and business credit to predict small business risk.

Access to business credit scores and reports is not restricted like personal credit reports. Business credit reports are available to the public, and anyone - including potential lenders and suppliers - can view your business credit report. This makes it imperative to monitor your business credit score and report.

You can proactively manage your business credit score. Ensure your vendors are reporting your business payment history, and monitor your business' credit on a regular basis. Experian's BusinessCreditFacts.com provides easy access to business credit reports and information about the business credit scoring process.

Back to top



What tools do creditors use to evaluate my business?
Credit monitoring is a key tool used in managing risks and maximizing revenue. Often, being the first to know about financial distress can help creditors ensure collection of their assets from distressed accounts. The converse is also true. Quickly spotting accounts on their way up provides opportunities for growth that may not be there from latecomers. Monitoring systems employ event-based notifications, or triggers (delivered in the form of an alert). Effective use of triggers can help credit managers partner with business customers who are on the way up and limit exposure to those on the way down.

With business credit monitoring tools, it's impossible to overstate the importance of reviewing credit data for changes, particularly among the more volatile small businesses. Data that may be monitored includes:

  • Credit scores: significant changes for better or worse
  • Credit balance attributes, such as high credit, total balance, percent current or credit utilization
  • Payment behavior: paying more slowly or in less time
  • Major derogatory events such as bankruptcy, collections, judgments and liens
Positive alerts might include a score changing for the better; days beyond terms decreasing, indicating bills are being paid in less time; balances going down; or balance-to-limit ratios declining.

Positive alerts can allow credit managers to identify customers to whom they'd like to extend or increase credit. Perhaps an account with a $5,000 credit line should be increased to $10,000. Perhaps an account's score has risen by 10 points, and the company has been gradually increasing its spending while paying on time. If it's a business that's expanding, that business may be receptive to an offer of improved service or better terms.

For example, a customer paying on net 30 terms could be offered a 2 percent discount for paying within 10 days, or this customer should not be restricted to terms requiring payment of the net balance within 30 days of delivery or receipt of the invoice. Perhaps the customer should be allowed net 45 terms in exchange for a larger percentage of the business.

Back to top



Once changes have been submitted how long before my business credit report is updated?
Changes, once loaded by Experian into the Experian business credit file, will have an immediate impact on the business credit report and score. Approved requests for updated business credit information are loaded weekly over the weekends. However, depending on the nature of the request, investigation and approval of the requested update can take up to 30 or 60 days. For example, a simple demographic update to business street address will not take as long to investigate, approve and process as it would to dispute trade credit detail.

To update information on your Experian business credit report, please click here to begin the process.

Back to top



Why do some of my business credit lenders and suppliers not appear on my business credit report?
Experian collects credit obligation information from thousands of business suppliers and lenders nationwide. Experian only reports trade relationships provided to us by these third-party suppliers and lenders (Experian's data contributors) to ensure the integrity of our business credit database.

Experian relies upon these data contributors to provide small business payment account information, known as trade credit transactions, to Experian's business credit database. However, not every company contributes to the Experian business credit database.

The key to building a business credit report and score, particularly for small businesses just starting out, is to find companies that will establish credit for your business and then report the company's payment experience to the business credit bureaus, such as Experian.

To encourage your existing business credit issuer or supplier to report your payment experiences, Experian has made it easy for you to write or email your supplier. Simply click here to visit the page and download our template containing a letter of request.

Back to top



Why did my business credit score drop when I do not see any significant changes in my business credit report?
It is not uncommon for a business credit score to fluctuate slightly. Experian's proprietary model for business credit scores looks at over 140 modeling variables to derive the business credit ranking score, so there are other factors beyond what is displayed on the business credit report that can cause a score to slightly change or shift.

Factors include, but are not limited to:

  • The presence of derogatory public records on the business profile, such as collections, liens, judgments and bankruptcies
  • The status, recent status, frequency and dollar amounts of any applicable liens, judgments, or bankruptcies
  • An increased trend in slow payment of obligations
  • An increase in the number of business credit inquiries or applications that are generated by the business or owner
  • The number of trade experiences, balances outstanding, payment habits, credit utilization, and trends over time
  • Years in business, line of business or Standard Industrial Classification (SIC), size of business and other demographic data

Back to top



What can impact my business credit score?
There are a number of factors that could have an adverse impact on your company's business credit score. Those factors include, but are not limited to:

  • The presence of derogatory public records on the business profile, such as collections, liens, judgments and bankruptcies
  • The status, recency, frequency and dollar amounts of any applicable liens, judgments, or bankruptcies
  • An increased trend in slow payment of obligations
  • An increase in the number of business credit inquiries or applications that are generated by the business or owner
  • The number of trade experiences, balances outstanding, payment habits, credit utilization, and trends over time
  • Years in business, line of business or Standard Industrial Classification (SIC), size of business and other demographic data

Back to top



How will the payment or satisfaction of tax liens, judgments, and collections impact my business credit score?
A business credit score is modeled on a particular company's payment history, existing credit obligations, previous or existing legal filings, and background history. Often used as an indicator of a company's "financial health", a business credit score is most commonly used to help a lender decide if a company can take on additional financial obligations, and if it will most likely pay those obligations on time.

Satisfaction of derogatory items, such as liens, judgments and collections, will have a positive impact on the overall business credit score. As well, the further away in time from the event, gradually the business credit score will get better.

Back to top



How does an annual review of my business credit report impact my business credit score?
Periodic or annual reviews of your Experian business credit report do not have an impact on your overall business credit score. Such reviews of your own report are considered "soft" inquiries, and are part of the normal business management practice of a business owner.

It is always a good idea to periodically check your business credit report for accuracy, and it is a first step toward securing a good credit standing. Many lending institutions pay very close attention to payment behavior trends of a business when determining the interest rate and borrowing power for business loans.

You can develop a strategy to improve your company's credit standing by examining the strengths and weaknesses of your business credit report.

Back to top



If my business changes names and tax ID numbers, how can my established credit history follow me to the new entity?
If a business changes its name and tax ID, its credit history will not follow because a new business has been formed. The old credit history will stay with the old business, and the new business with the separate tax ID will build its own credit history.

Back to top



Why is credit important to small businesses?
To ignore your business credit could be a fatal mistake. It's an essential link in the chain of success. If you are concerned about your company's image that you customer base sees, you should be just as concerned about how your business credit looks to essential people like lenders and potential business partners. And just think of how your personal credit can affect your life – the difficulties that bad credit poses for an individual can end up plaguing your firm too.

It's important to maintain a business credit profile that is distinctly separate from your personal credit profile. Building separation between the two can help your business develop the credibility that matters to banks, suppliers, and other creditors. A business credit profile that includes multiple, positive reports from financial institutions, vendors, utilities, telephone accounts, lessors, and other operational credit accounts in your company's name shows that your business pays its creditors in a timely manner. Maintaining separation can also protect your personal credit profile should a financial mishap occur in the company, and, conversely, can help insulate your business from anything that might have an adverse affect on your personal credit.

It's also important to remember that anyone can view your business credit report and score for any reason, unlike the information in your personal credit file.

Back to top



What are some credit related challenges that SMB owners face?
Many SMB owners run their company using a combination of supplier financing and personal credit – maybe adding an equipment lease or commercial loan into the mix, and then buy office supplies on a personal credit card, and have the telephone account listed in a personal name.

Being inconsistent in maintaining sound payment practices may result in missing important opportunities to build a solid business credit profile. Whereas having a robust history of steady payments to a variety of creditors boosts the borrowing power of your business and puts other companies at ease about extending credit to your firm.

Back to top



What steps can companies take to overcome blemishes on their credit?
With the everyday rush of tasks that comes with SMB ownership, it can seem difficult to add yet another thing to monitor, but your company depends on it, especially small businesses looking to grow.

First, check and correct your business credit. Know what is in your business credit report at all times, monitor it and understand your business credit score. It is a modest investment that will help you spot any issues in the file and address or correct them. It can also alert you to any fraud being perpetrated in the name of your business. And, be sure to check your credit profiles well in advance of applying for new credit so that you have time to address any inaccuracies or problems prior to submitting your loan or other credit application. A good resource for this is www.SmartBusinessReports.com and www.BusinessCreditFacts.com.

Second, borrow and pay on time. Some businesses think that the only way to establish business credit is to open a business credit card. While that makes sense for some companies, securing credit terms from suppliers or taking out a commercial loan can offer similar benefits with fewer downsides. Paying according to agreed-upon terms is a critical step in establishing good business credit.

Lastly, act like a business. Even the smallest operation can benefit from a positive business credit profile. Again, your business accounts (telephone, utilities, leases, loans) should be established in your business' name. In the early stages of a business, you may need to personally guarantee payment, but the more established your business credit history is, the more likely it is you'll be able to negotiate and secure good credit terms without those guarantees.

Back to top



How can I partner with Experian and get my company's articles on BusinessCreditFacts?
Click here for more information.

Back to top



What are the advantages for maintaining business credit separate from personal credit?
There are many advantages to establishing and maintaining solid business credit. A few of these benefits are listed below.
  • 1.) With better business credit you will be able to obtain more working capital for your business. You will also be able to borrow money at lower rates.
  • 2.) Having a separate line of business credit, such as a business credit card, makes it easy to keep your business expenses separate from your personal expenses. This means when it comes time to file your taxes, you'll already have separate financial records for business expenses and personal expenses, making both your life and your tax attorney's life simpler.
  • 3.) With a business credit line, you can also extend credit to your employees by requesting additional cards. You can even control how much they can spend by adjusting their credit limits.
  • 4.) With Cash Back Rewards for your business, such as those offered by the First Equity Platinum Visa, you'll have more money available to invest in the growth of your business.
  • 5.) Perhaps the most important benefit of separating your business credit from your personal credit is that having a separate line of business credit means that your personal credit is protected if your business ever gets in trouble.

Provided by:

First Equity
First Equity is a leading credit card provider specializing in the provision of bankcards to the nation's small businesses.

Back to top



Are there credit card products designed especially for small businesses like mine?
If you are a small business owner, a credit card designed for your type of business makes a lot of sense. A small business card is a commercial card that builds credit standing in the name of your business, and it can offer a higher credit line for working capital than you might obtain with an equivalent consumer card. A small business credit card provider may also be able to approve your business for an account even if you have not already established a commercial credit history in the name of your business.

Choosing the right credit card product will maximize the value you get from your credit provider as well as enhancing the probability that you will be easily approved.

Provided by:

First Equity
First Equity is a leading credit card provider specializing in the provision of bankcards to the nation's small businesses.

Back to top



What are the key features of a commercial credit line for my business?
A commercial credit line is a source of working capital for your business. It can help you pay for business resources while you wait for payment from your customers, and in many cases the financing costs are tax deductible. Use of a credit card to access your commercial credit line allows for additional convenience and security, as well as a self-documenting statement of transactions for record keeping. You can even get a free credit card for any employee you choose, with a credit limit controlled by you as the Authorizing Officer.

Provided by:

First Equity
First Equity is a leading credit card provider specializing in the provision of bankcards to the nation's small businesses.

Back to top



Requesting a copy of your company's credit report

Purchasing your company's Experian Business Credit Report

Experian provides you an easy way to obtain a copy of your own company's business credit report instantly online. An Experian business credit report can be purchased by you at any time for any reason and any purpose.


Purchasing an Experian Business Credit Report on another company

A business credit report can be purchased on your own business or on any company within the United States, such as a business client, supplier, vendor or partner. One does not need permissible purpose or authorization from the company, or business principal of the company, to obtain a business credit report on another company. You may purchase a business credit report instantly online to view another company's business credit information for any reason and any purpose.


When your request for business credit has been declined

If your company has been declined credit based upon an Experian business credit report within the past 60-days, Experian will provide you with access to a complimentary copy of your company's business credit report. Experian requires that you submit your request in writing, on your company letterhead, including the following information:

1.  State that you are requesting a copy of your company's Experian business credit report. You must include a copy of the notification letter from the creditor who declined you. If a copy is not available, Experian cannot provide you access to a complimentary business credit report.
2.  List your full business name, including any variations, and any names or prior names under which your company has operated (“doing business as” or “also known as”) for the past 10 years.
3.  List your company's current physical address(es) and P.O. Box(es).
4.  List your company's prior physical address(es) and P.O. Box(es) for the past 10 years.
5.  Provide the signature of an owner or officer of your company.

Please send this business information to:
   Experian
   Commercial Relations – RFR
   P.O. Box 5001
   Costa Mesa, CA 92628-5001

Or email this business information to:
   Experian
   Commercial Relations – RFR
   RFR@experian.com

Back to top



Are the costs of business credit tax deductible?
Yes, the costs of business credit can be tax deductible. You should consult your tax attorney for more detailed information, but interest and finance charges incurred on your business account are tax deductible. This is an important distinction between business credit and personal credit, and is one of many reasons why it is in your best interest to separate your business expenses from your personal expenses.

Provided by:

First Equity
First Equity is a leading credit card provider specializing in the provision of bankcards to the nation's small businesses.

Back to top



Can I gain access to credit for my business without loan fees or closing costs?
There are many ways to gain access to credit for your business. Some types of credit involve loan fees and closing costs. These are often secured bank loans which use property or other collateral to back the loan. In the event that you cannot repay your loan, the creditor has the right to seize the property used as collateral in the loan.

Other types of business credit do not have any loan fees or closing costs associated with them. One of the easiest and quickest ways to gain access to credit for your business, without loan fees or closing costs, is to apply for a business credit card.

Provided by:

First Equity
First Equity is a leading credit card provider specializing in the provision of bankcards to the nation's small businesses.

Back to top



What is the most convenient type of credit for my business?
Credit cards offer one of the most convenient types of credit for a small business. As with consumer credit cards, you can use a business credit card at millions of retail locations and ATMs worldwide. You also have access to online shopping, which is very difficult without a credit card. Also, unlike a fixed payment loan, you have the option to pay off only a portion of the balance in a given month. This greater flexibility of payments means you have money available when you need it most, and it gives you the freedom to buy the things you need when you need them.

Provided by:

First Equity
First Equity is a leading credit card provider specializing in the provision of bankcards to the nation's small businesses.

Back to top



How can I establish a large working capital credit line for my business?
The best way to establish a high credit limit is through responsible use of credit using the most appropriate credit card products. For a small business credit card, your credit improves every time you make a timely payment. You can request credit line increases from your credit issuer as your credit standing improves, and most credit card programs also grant credit line increases periodically on an automated basis. By using a credit card account and making payment by the due date each month you can build up a very significant credit line for your business over time.

Provided by:

First Equity
First Equity is a leading credit card provider specializing in the provision of bankcards to the nation's small businesses.

Back to top



Do I need an EIN or federal tax ID number in order to get credit in the name of my business?
No, you do not need an EIN or a federal tax ID number in order to apply for credit in the name of your business. You can just use your social security number.

If you would like to request a federal tax ID number, please contact the Internal Revenue Service for Form SS-4. You can download this form from the IRS web site at www.irs.gov/pub/irs-pdf/fss4.pdf. If you would like more information on establishing and building a new business, you can visit the Small Business Administration website at www.sba.gov. For more information on taxes related to starting a business, please visit the IRS's business tax site at www.irs.gov/businesses/index.html and your local tax attorney.

Provided by:

First Equity
First Equity is a leading credit card provider specializing in the provision of bankcards to the nation's small businesses.

Back to top



Can I give my employees access to a business line of credit controlled by me as the business owner?
If you have a business credit card, you can request additional cards for your employees. Some issuers, such as First Equity, offer these additional employee cards for free! With the First Equity Platinum Visa or MasterCard, you, as the owner of the business, get to decide how much credit to extend to each of your employees since each card has its own credit limit. In your monthly statement, you will also be able to see which purchases were made using each card, so you can make sure your employees are using their cards for business expenses. Even better, as the owner of the business, you receive all rewards points earned from the purchases made by your employees.

Provided by:

First Equity
First Equity is a leading credit card provider specializing in the provision of bankcards to the nation's small businesses.

Back to top



Is it possible to get credit for my business on an unsecured basis, without placing a lien on my assets?
Yes! The fastest and easiest way to obtain unsecured credit for your business is to apply for a business credit card. Unlike secured bank loans, credit cards are unsecured loans so you won't have to worry about having a lien placed on your assets

Provided by:

First Equity
First Equity is a leading credit card provider specializing in the provision of bankcards to the nation's small businesses.

Back to top



My business has fallen victim to business fraud and/or identity theft. What should I do?
First, Experian recommends that you place a fraud alert with Experian and any of the other credit bureaus. To place a fraud alert on your Experian business credit report, simply send Experian Commercial Relations a letter on your company letterhead requesting that a fraud alert be placed on your business credit report and include a brief explanation why. You will need to include the signature of the company's business owner, along with that person's contact information. Experian will add a message to the company's business credit report asking that the business be notified prior to any lender extending business credit.

Then, sign up for a business monitoring of your company's credit report. A great way to help protect yourself and your business name is to regularly check your company's business credit report for unusual activity that might indicate fraud. Experian has a service called Business Credit Advantage which provides unlimited access to your business credit report for a one full year. Plus, this service monitors your profile daily and sends you email notifications of any changes to your business credit report or score.

To learn more about Experian's business credit monitoring service, click here.

Back to top



How can I place a fraud alert on my business credit file?
If you believe or have proof that your business has become victim to business fraud and/or identity theft, you can place a fraud alert on your business credit report. To do so, send Experian Commercial Relations a signed letter on your company letterhead requesting that a fraud alert be placed on your business credit report and include a brief explanation why. You will need to include the signature of the company's business owner, along with that person's contact information. Experian will add a message alert to the company's business credit report asking that the company be notified prior to any lender extending business credit.

It is important to understand that a business fraud alert is not a credit freeze. A business fraud alert is a message that displays on the business credit report for lenders to see so that they can take additional cautionary measures and actions on the verification of the business. The fraud alerts do not display on Business Public Record reports.

Back to top



What can I do to protect my business from commercial fraud and changing risk?
Commercial fraud is a growing problem for all businesses, but particularly for small businesses. To combat commercial fraud, you need to check your own business credit report, as well as the credit of those you do business with on an ongoing basis. Checking once is not enough to protect you and your business. This is a simple yet crucial process that many companies skip, but it could mean the difference between working with legitimate businesses and losing money — or even your business.

Experian's business credit reports provide business background, comprehensive financial information and credit risk facts in an easy-to-read, online format. Business credit reports include:
  • Sophisticated business credit scores
  • Accurate information from objective sources (no self-reported information)
  • Extensive banking, trade and collection data
  • Standard and Poor's financial information on more than 10,000 public companies
  • Business public record data including liens, judgments, business registrations, bankruptcies and Uniform Commercial Code (UCC) filings
In addition, Experian business credit reports provide data that is drawn from the largest business database in the industry, including more than 27 million credit-active company records. Our information is constantly updated and third-party verified with no self-reporting accepted from listed companies. This assures that you'll receive accurate information from objective sources. Through Experian's business database you can find all the business information you need in one place, including comprehensive demographic, financial and public record information as well as analytic credit scores.

Experian's SmartBusinessReports.com also helps you confidently extend credit to vendors, suppliers and customers, protecting your business from changing risk.

Back to top



Business fraud activities prevalent in the marketplace today
We've all become well educated on the increasingly bold moves fraudsters take to steal personal identities to secure jobs, cars, homes and more; but what about business-to-business fraud? As a small business owner, how much thought do you give to fraud protection for your business?

You have much to fear and even more to lose if you become a victim of commercial fraud. Approximately 30 percent of all business credit losses are attributed to some type of misleading or fraudulent information. How do these fraudsters operate?
  • "Bustouts" or "overbuys" — These terms describe criminal activity designed to obtain large amounts of merchandise without paying for it.
  • Hit and run — A swindler moves into a location and orders merchandise COD, paying with phony certified or cashier's checks. By the time the check bounces, the "skip artist" has moved on to a new location to repeat the fraud.
  • Advanced fee scams — An up-front payment is obtained for services to be rendered after, supposedly to cover costs. This advance fee is accepted with no intention of providing the service.
The net result is that financial damages from these and other business scams far overshadow losses from consumer fraud. On average, losses are three to 10 times higher.

Back to top



Reference checking tips to stop business fraud before it starts
Verifying is a regular activity for small business owners, but as you make the phone call to check a business reference, did you ever stop to think that the person on the other end of the phone might not be who they say they are? Fraudsters will take advantage of your trust in many devious ways:
  • References supplied by a fraudulent company may not be all they seem at first glance. To avoid being lulled into a state of complacency by a company with all the right references, re-examine those references with a more critical eye.
  • Be suspicious if a reference provided by the new customer gives an instant "glowing" account without taking time to consult records when you call.
  • Both trade and friends or partners of the fraudulent businessperson can fake bank references. Take care when you are provided with a specific extension from an individual and are told to "Ask for Joe".
  • Answering services can be used to provide a false confirmation or reference.
  • Beware of hard-to-trace fax numbers supplied as the only way to contact references. They may all lead to a single location where one individual can respond to reference checks using a variety of business names.
It's unfortunate that B2B criminal activity is on the rise, but you need to protect your business. Data validation on business information is an invaluable step. One of the best defenses is conducting regular business credit checks using Experian's SmartBusinessReports.

Back to top



What does Experian offer that competitors don't?
There are many differences between Experian business credit products and competitors' products. Three of the largest differences are blended data, data quality and ease of use.

  1. Blended data scores: Experian combines up to 200 variables from a business owner's personal credit and business credit to deliver the most predictive score for a small business. Blending data utilizes Experian's vast consumer and business credit databases.
  2. Data quality: Except for proprietary data in the Small Business Credit Share program, all Experian business tradeline data is provided by a third-party and/or is third-party verified. No self-reported tradeline data is accepted to maintain data integrity.
  3. Ease of use: Experian offers a flexible customer experience. Products are scalable for any sized company and pricing ranges from various subscriptions to pay-as-you-go.

Click here to see a flash demo of Experian's business credit capabilities.

Back to top



Why should my company use business credit reports and scores?
Just as a consumer credit report can help assess credit risk, a business credit report or score helps identify which businesses you want to do business with, what credit limits should be and what credit or payment terms should be agreed to. The more you know about a business's current financial obligations and its past payment history, the better you are able to either grow your customer list or protect yourself from risk.

Back to top



What experience does Experian have with business credit reporting?
Experian has been doing business credit reporting and scoring for over 30 years. In addition to business credit reports and scores, Experian also offers commercial portfolio management tools, commercial fraud tools and collections tools.

Experian holds more demographic and credit information on individuals and businesses than any other company in the world, providing power and insight to better understand customer and prospect needs. We maintain credit information on approximately 215 million U.S. consumers and more than 27 million credit-active public and private U.S. businesses.

Back to top



What B2B commercial credit scoring products does Experian offer?
Experian's most used scores are the Intelliscore products built on our most sophisticated modeling algorithms. Commercial Intelliscore is calculated using a company's business credit data only. Small Business Intelliscore is calculated using a blend of consumer data for up to two business owners or proprietors and business data. Experian also offers two scores for the commercial leasing industry.

Back to top



How are business credit scoring models developed?
Business credit scoring models are developed using sample sizes that range from 1 to 3 million businesses. Development of business credit scoring models is extremely complex; but in simple terms, models are built after hundreds of hours of analyzing business firmographics and business credit histories, identifying payment trends, and creating predictive algorithms based on findings. Up to 200 variables may be used in calculating a single business credit score. All business credit scoring models are developed in-house and are proprietary to Experian.

Back to top



Why is blended data more predictive than consumer or business data alone?
Blended data is combined business owner credit data and company credit data. Some small businesses just starting out have limited business credit information on file making it hard to decide who to extend credit to and what terms to set. As a result, some companies use a business owner's consumer score to determine risk. However, an Experian study in 2005 showed that consumer scores are a poor predictor of business risk. Blended data solves that problem by combining two sources of credit data – owner and business. Validations have shown that blended credit data is the most predictive of small business risk – up to 3x more predictive than a consumer or business credit score alone.

Back to top



When should I pull a blended credit report or score?
Blended reports and scores of consumer and business credit data should be pulled when evaluating small businesses. Although the term 'small business' can vary by company. Experian identifies the quintessential 'small business' as having less than 25 employees and/or making less than $10 Million annually. Providing business credit ratings on these small businesses is where Experian excels because of our vast consumer and business data resources.

Back to top



Does Experian have B2B products beside credit reports and scores?
Experian has a full suite of business tools that include portfolio management, portfolio monitoring, commercial fraud authentication, tax ID verification, and collections and recovery tools. Many of the largest fortune 500 companies in the United States are among our business clientele.

Back to top



How do I buy Experian business credit products?
Experian business credit products can be purchased via a credit card or via business-to-business billing.

If you need to pull multiple reports regularly on businesses other than your own, it makes sense to sign up for business-to-business membership and billing rather than purchasing via a credit card. Experian promotes flexible pricing and offers subscriptions as well as pay-as-you-go monthly billing. Our business credit products can be purchased through one of our many resellers or directly from Experian. Please call 1-800-520-1221 to speak to a sales support representative.

Back to top



Checklist for starting a business
Most businesses start out small. The checklist below provides the basic steps for starting a business. The list is not all inclusive. Your specific type of business could require other steps. The Small Business Administration (www.sba.gov), Internal Revenue Service (www.irs.gov), and the organization SCORE (www.score.org) all offer free help to new small business owners with starting a business.
  • 1. Apply for a federal Employer Identification Number (EIN). You may need it for a variety of reasons, including some that are not tax-related, such as opening a bank account.
  • 2. Consult a tax advisor, even if you are just thinking about starting a business. There are many decisions to make in starting a business such as choosing a business structure, tax year and accounting method.
  • 3. Pay estimated federal and state taxes four times a year. Your tax advisor can help you determine how much to set aside ahead of time for your payment.
  • 4. Keep good business records of income and expenses. Save all receipts.
  • 5. If you plan to have employees, make sure you understand all the requirements and forms that you need to submit when hiring employees.

Provided by:
This information provides a brief overview from the Internal Revenue Service of issues and decisions involved in owning a small business and avoiding common pitfalls.


Back to top



What is an Employer Identification Number (EIN)?
An Employer Identification Number (EIN) is also known as a Federal Tax Identification Number. Generally, businesses need an EIN. You may apply for an EIN in various ways, including online. This is a free IRS service. Check with your state to see if you need a state number or charter.

To apply for a federal EIN go to www.irs.gov and type EIN in the search box. The IRS Internet EIN application is the fastest and most accurate way to get an EIN. Once the online application is completed, the information is validated and an EIN is issued immediately. Before applying, make sure you have the information you need by downloading a Form SS-4, Application for Employer Identification Number. It contains all the items that will be requested when you apply for an EIN.


Provided by:
This information provides a brief overview from the Internal Revenue Service of issues and decisions involved in owning a small business and avoiding common pitfalls.


Back to top



How to choose a tax advisor for your business
If you choose to use a tax advisor, it is important that you find a qualified tax professional. You are ultimately responsible for everything on your return even when it's prepared by someone else.

If you are starting a new business or are just thinking about it, talk with a tax professional who knows small businesses. Some tax professionals specialize in specific business types, like sole proprietors, partnerships, limited liability companies (LLCs), S-Corps, or corporations. A knowledgeable preparer will ask you multiple questions to identify your small business taxation issues. Keeping good records will help your tax advisor when it comes time to file your return. Your income records and receipts determine your total income and your qualifications for expenses, deductions, and credits.

Most tax return preparers are professional and honest. Here are some tips for choosing a good preparer:

Avoid preparers who claim you do not have to make estimated taxes or that they can obtain larger refunds than other preparers, or those who say they know ways to help you claim personal expenses like the cost of your home or your children's education.

Choose a preparer who will be responsive to your needs and provide year-round service.

References are very important for a tax professional who is handing your business. Ask questions and get references from other small business owners who have used the tax professional before. Were they satisfied with the service received? Get more than one reference.

Check to see if the preparer has any questionable history with Experian's business credit reports, the Better Business Bureau, the state's board of accountancy for CPAs or the state's bar association for attorneys. Find out if the preparer belongs to a professional organization that requires its members to pursue continuing education and also holds them accountable to a code of ethics.

Does your state have licensing or registration requirements for paid preparers? Is he or she an Enrolled Agent, Certified Public Accountant, or Attorney? If so, the preparer can represent taxpayers before the IRS on all matters – including audits, collections, and appeals. Other return preparers can represent taxpayers only in audits regarding a return signed as a preparer.


Provided by:
This information provides a brief overview from the Internal Revenue Service of issues and decisions involved in owning a small business and avoiding common pitfalls.


Back to top



What are the common forms of businesses, and what structure makes the most sense for your new small business?
Before you consult with a tax advisor or consultant you may want to do some research yourself. One of your first decisions as a business owner is what form of business you choose. This decision is very important because it can affect how much you pay in taxes, the amount of paperwork your business is required to do, the personal liability you face and your ability to borrow money. Business formation is controlled by the law of the state where your business is organized.

The most common forms of businesses are:

  • Sole Proprietorships
  • Partnerships
  • Corporations
  • Limited Liability Companies (LLC)
  • Subchapter S Corporations (S Corporations)
While state law controls the formation of your business, federal tax law controls how your business is taxed. All businesses must file an annual return. The form you use depends on how your business is organized.

The answer to the question "What structure makes the most sense?" depends on the individual circumstances of each business owner. One form is not necessarily better than any other. Each business owner must assess their own needs. Here is a brief look at the various business forms.

Sole Proprietorship

A sole proprietorship is the most common form of business organization. It's easy to form and offers complete control to the owner. But the business owner is also personally liable for all financial obligations and debts of the business.

As a sole proprietor you can operate any kind of business as long as you are the only owner. It can be full-time or part-time work. This includes operating a:

  • Shop or retail trade business
  • Large company with employees
  • Home-based business
  • One-person consulting firm
Every sole proprietor is required to keep sufficient records to comply with federal tax requirements regarding business records.

Your net business income or loss is combined with your other income (other income could be your salary if you also work for someone else, or your investments) and deductions and taxed at individual rates on your personal tax return.

Sole proprietors do not have taxes withheld from their business income so you may need to make quarterly estimated tax payments. You generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when you file your return. Use Form 1040-ES, Estimated Tax for Individuals, to figure and pay your estimated tax.

Partnership

A partnership is the relationship existing between two or more persons who join to carry on a trade or business. Each person contributes money, property, labor or skill, and expects to share in the profits and losses of the business.

Each partner reports his share of the partnership net profit or loss on his personal tax return. Partners must report their share of partnership income even if a distribution is not made.

Partners are not employees of the partnership and so taxes are not withheld from any distributions. Like sole proprietors, they generally need to make quarterly estimated tax payments if they expect to make a profit.

Corporation

A corporate structure is more complex than other business structures. It requires complying with more regulations and tax requirements.

Corporations are formed under the laws of each state and are subject to corporate income tax at the federal and state level. In addition, any earnings distributed to shareholders in the form of dividends are taxed at the individual tax rates on their personal annual tax returns.

The corporation becomes an entity that handles the responsibilities of the business. Like a person, the corporation can be taxed and can be held legally liable for its actions. If you organize your business as a corporation, you are generally not personally liable for the debts of the corporation. (Exceptions may exist under state law.)

Limited Liability Company

A Limited Liability Company (LLC) is a relatively new business structure allowed by state statute.

LLCs are popular because, similar to a corporation, owners have limited personal liability for the debts and actions of the LLC. Other features of LLCs are more like a partnership, providing management flexibility and the benefit of pass-through taxation.

Owners of an LLC are called members. Since most states do not restrict ownership, members may include individuals, corporations, other LLCs and foreign entities. Most states also permit "single member" LLCs, those having only one owner.

Subchapter S Corporation

The Subchapter S Corporation is a variation of the standard corporation. The S corporation allows income or losses to be passed through to individual tax returns, similar to a partnership.

Generally, an S corporation is exempt from federal income tax other than tax on certain capital gains and passive income.

For more information about the types of businesses, enter "Choosing a Business Structure" in the search box on the IRS website, www.irs.gov.


Provided by:
This information provides a brief overview from the Internal Revenue Service of issues and decisions involved in owning a small business and avoiding common pitfalls.


Back to top



What are a business owner's requirements for paying estimated tax?
Unfortunately for some business owners, when they go to file their annual tax return it comes as a complete surprise that they were supposed to make estimated tax payments during the year. Sometimes new business owners are unaware of the federal tax law that requires a business owner to project their income after expenses and make estimated tax payments. Generally the rule for federal tax liability is you must pay estimated tax for the year if the following applies:

Sole proprietors, partners, and S corporation shareholders - You generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when you file your return. To determine your estimated taxes, use Form 1040-ES, Estimated Tax for Individuals, to figure and pay your estimated tax. For additional information, refer to Publication 505, Tax Withholding and Estimated Tax.

If you receive salaries and wages, you can avoid having to pay estimated tax by asking your employer to take more tax out of your earnings. To do this, file a new Form W-4 with your employer. Publication 505, Tax Withholding and Estimated Tax, provides more information about these special estimated tax rules.

Corporations - You generally have to make estimated tax payments for your corporation if you expect it to owe tax of $500 or more when you file its return. Use Form 1120-W, Estimated Tax for Corporations, to figure the estimated tax. You must deposit the payments. For additional information, refer to Publication 542, Corporations.

How to Figure Estimated Tax

To figure your estimated tax, you must figure your expected adjusted gross income, taxable income, taxes, deductions, and credits for the year.

When figuring the year's estimated tax, it may be helpful to use your income, deductions, and credits for the previous year as a starting point. Use your last federal tax return as a guide. You can use Form 1040-ES to figure your estimated tax.

You must make adjustments both for changes in your own situation and for recent changes in the tax law.

When to Pay Estimated Taxes

For estimated tax purposes, the year is divided into four payment periods specified on Form 1040-ES. Each period has a specific payment due date. If you do not pay enough tax by the due date of each of the payment periods, you may be charged a penalty even if you are due a refund when you file your income tax return.

Using the Electronic Federal Tax Payment System (EFTPS) is the easiest way to pay your federal taxes for individuals as well as businesses. Make ALL of your federal tax payments including federal tax deposits, installment agreement payments and estimated tax payments using EFTPS.


Provided by:
This information provides a brief overview from the Internal Revenue Service of issues and decisions involved in owning a small business and avoiding common pitfalls.


Back to top



Why keep good business records?
For many new small business owners the first year is generally the hardest. First you have to decide what form of business you want, then there is extensive business record keeping. Bad record keeping can be a serious pitfall for small business owners. You can avoid headaches when you are filing your tax return by keeping track of your receipts and other records throughout the year.

Everyone in business must keep records. Good business records will help you do the following:

  • Monitor the progress of your business
  • Project your tax liability
  • Prepare your financial statements
  • Identify source of receipts
  • Keep track of deductible expenses
  • Prepare your tax returns
  • Support items reported on tax returns
Monitor the progress of your business

You need good records to monitor the progress of your business. Records can show whether your business is improving, which items are selling, or what changes you need to make. Good records can increase the likelihood of business success.

Project your estimated tax payments

During that first year of business you will need to project your tax liability so that you can make estimated tax payments. Estimated tax is the method used to pay tax on income that is not subject to withholding. Estimated tax is used to pay income tax and self-employment tax, as well as other taxes and amounts reported on your tax return.

Prepare your financial statements

You need good records to prepare accurate financial statements. These include income (profit and loss) statements and balance sheets. These statements can help you in dealing with your bank or creditors and help you manage your business.

Identify source of receipts

You may receive money or property from many sources. Your records can identify the source of your receipts. You need this information to separate business from your personal receipts and taxable from nontaxable income.

Keep track of deductible expenses

It is very important to have a system to keep track of your deductible expenses. If you don't keep your receipts you may forget expenses when you prepare your tax return, unless you record them when they occur.

Prepare your tax return

You need business good records to prepare your tax returns. These records must support the income, expenses, and credits you report. Generally, these are the same records you use to monitor your business and prepare your financial statement.

Support items reported on tax returns

You must keep your business records available at all times for inspection by the IRS. If the IRS examines any of your tax returns, you may be asked to explain the items reported. A complete set of records will speed up the examination. Normally, tax records should be kept for three years, but some documents — such as records relating to a home purchase or sale, stock transactions, IRA and business or rental property — should be kept longer.


Provided by:
This information provides a brief overview from the Internal Revenue Service of issues and decisions involved in owning a small business and avoiding common pitfalls.


Back to top



What to know when hiring employees
If you hire employees there is information that you need to secure for your records and forms that you must complete. You must verify that each new employee is legally eligible to work in the United States. Have the employees you hire fill out Form I-9, Employment Eligibility Verification, and Form W-4, Employee's Withholding Allowance Certificate. If your employees qualify and want to receive advanced earned income credit payments, they must give you a completed Form W-5, Earned Income Credit Advanced Payment Certificate.

Employee's Social Security Number (SSN)

You are required to get each employee's name and Social Security Number (SSN) and to enter them on Form W-2. (This requirement also applies to resident and nonresident alien employees.) You should ask your employee to show you his or her social security card. You may, but are not required to, photocopy the social security card if the employee provides it. Record each new employee's name and social security number from his or her social security card. Any employee without a social security card should apply for one using Form SS-5, Application for Social Security Card. The Social Security Administration (www.ssa.gov) offers social security number (SSN) verification and quick access to relevant forms and publications.

Employment Tax

The proper handling of employment tax is a very important part of operating and managing a small business. This can be a major pitfall for some small business owners and is avoidable.

Federal employment taxes include the following:

  • Federal income tax withholding
  • Social Security and Medicare taxes
  • Federal unemployment tax (FUTA)
When you pay your employees, you do not pay them all the money they earned. The income tax and the employees' share of FICA (Social Security and Medicare) you withhold from your employees' paychecks are the part of the money you pay to the U.S. Treasury. This portion of their wages must be sent to the U.S. Treasury and is called "Trust Fund" taxes. Your employee's trust fund taxes, along with your employer's matching share of FICA, are paid through the Federal Tax Deposit (FTD) System. This money should not be used if your business has a cash-flow problem. It is not your money. It is actually your employees' money. Generally, you don't hold the money and send it with the employment tax return. You make Federal Tax Deposits on a schedule throughout the quarter and you must make them timely. The longer you delay paying the money, the more it can cost you. Congress established large penalties for employers that delay in turning over employment taxes to the U.S. Treasury.

The easiest way to make your deposits of withheld taxes and FICA is by using Electronic Federal Tax Payment System (EFTPS). This is a tax payment system provided free by the U.S. Department of Treasury, which allows businesses to pay federal taxes electronically via the Internet or phone 24/7. EFTPS via the Internet is a secure government web site that uses the highest level of security available. You can also use Form 8109, Forms 8109-B, Federal Tax Deposit Coupon. For additional information, refer to www.irs.gov, keywords "Employment Taxes for Small Businesses".

Federal Income Taxes/Social Security and Medicare Taxes

To know how much income tax to withhold from employees' wages, you should have a Form W-4, Employee's Withholding Allowance Certificate, on file for each employee. Ask all new employees to give you a signed Form W-4 when they start work. Make the form effective with the first wage payment. If employees claim exemption from income tax withholding, they must indicate this on their Form W-4. The amount of income tax withholding must be based on filing status and withholding allowances as indicated on the form. If a new employee does not give you a completed Form W-4, then withhold tax as if he or she is single with no withholding allowances.

To figure how much to withhold from each wage payment, use the employee's Form W-4 and the methods described in Publication 15, Employment Tax Guide, and Publication 15-A, Employer's Supplemental Tax Guide.

Social Security and Medicare taxes pay for benefits that workers and families receive under the Federal Insurance Contributions Act (FICA). Social Security tax pays for benefits under the old-age, survivors, and disability insurance part of FICA. Medicare tax pays for benefits under the hospital insurance part of FICA. You withhold part of these taxes from your employee's wages and you pay a matching amount yourself.

You file the following forms to report federal income tax withheld, Social Security, and Medicare taxes.

  • Form 941, Employer's Quarterly Federal Tax Return or
  • Form 944, Employer's Annual Federal Tax Return
Federal Unemployment (FUTA) Tax

The federal unemployment tax is part of the federal and state program under the Federal Unemployment Tax Act (FUTA) that pays unemployment compensation to workers who lose their jobs. You report and pay FUTA tax separately from Social Security and Medicare taxes and withheld income tax. You pay FUTA tax only from your own funds. Employees do not pay this tax or have it withheld from their pay.

  • Report FUTA taxes on Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return.


Certain Taxpayers May File Their Employment Taxes Annually

To reduce burden for certain small business taxpayers, employers who have an employment tax liability of $1,000 or less for the year can file Form 944, Employer's Annual Federal Tax Return, instead of Form 941, Employer's Quarterly Federal Tax Return. Eligible employers are notified by mail.

Form W-2 Wage Reporting

After the calendar year is over you must furnish copies of Form W-2, Wage and Tax Statement, to each employee to whom you paid wages during the year. You must also send copies to the Social Security Administration. If you do not provide the correct employee name and SSN on Form W-2, you may owe a penalty unless you have reasonable cause.

The Form W-2 includes the employee's withheld income tax, Social Security tax and any advanced earned income tax credit payments. A copy of this form must be given to the employee by January 31st after the end of the year. You must also send a copy of the W-2 to the Social Security Administration (SSA). Filing these forms timely is important to ensure employees are credited with the proper Social Security amounts for retirement. Employers can prepare and file up to 20 W-2s at a time, free of charge, at the Social Security Administration's web site at www.ssa.gov. You can also print out all the necessary copies of the W-2 for your employees and state taxing agencies.

The due dates for filing Forms W-2 with SSA are:

  • The last day of February for paper forms
  • March 31 for forms filed electronically

The IRS and SSA exchange employment tax data. This data is an IRS document matching program that compares amounts reported to the IRS with amounts reported to SSA. When there is an imbalance, the employer is asked to provide information to help resolve the discrepancy.


Provided by:
This information provides a brief overview from the Internal Revenue Service of issues and decisions involved in owning a small business and avoiding common pitfalls.


Back to top



Four key indicators of business health: a monthly look at how businesses are faring in the United States
Experian's Business Benchmark Report is a monthly look at how businesses are faring in the United States. Designed to monitor the progress of business recovery, the report looks at four key indicators of business health, including commercial risk score, days beyond payment terms, percent of dollars delinquent and percent of dollars severely delinquent. These indicators are then broken out by size of business, industry group and region. Experian's Business Benchmark Report also tracks the percent change of these metrics over the last six months to provide a broader view of business performance in each area.

Key findings from this month's Business Benchmark Report include:

Size of business:
  • Businesses with more than 20 employees are decreasing the percent of delinquent dollars outstanding, whereas businesses with one to 19 employees are seeing a rise in delinquencies.
  • Non-employer firms* have also seen a decrease in the percent of delinquent dollars outstanding — with a more than 10 percent improvement over the last six months.
  • Businesses with more than 250 employees have a lower rate of severe delinquency when compared with all businesses. Only 2 percent of their dollars outstanding are considered severely delinquent (91 or more days), as opposed to the national average of 5 percent.
*Non-employer firms are businesses that have no paid employees.

Industry group:
  • In general, commercial risk scores** continue to decline across almost every industry group, indicating a higher average risk of delinquency over the next 12 months. Businesses in the Utilities group, however, have an average commercial credit score of 70.64 — well above (16.4 percent) the national average of 60.68. Businesses in the Health and Education Services industry groups are also doing better than the national average, coming in at 65.29 and 65.03 respectively.
  • Businesses in the Hospitality industry group show the lowest average credit scores at 56.12, which is 8.1 percent below the national average.
  • With the holidays approaching, it is noteworthy that retail is among the industry groups with the lowest commercial credit scores. With an average of 56.66, the retail industry's score is 6.6 percent below the national average.
**Commercial risk scores are based on a scale of 1 to 100, with a score of one indicating high risk and 100 indicating low risk.

Region:
  • Businesses in the Southwest, South Central and Mountain regions are showing signs of improvement, with a decline in the average percent of delinquent dollars in the last six months.
  • In the Northeast and New England, businesses show the largest increase in the percent of delinquent dollars over the last six months.
  • For the month of October, businesses in the Midwest show the greatest negative variance in the percent of delinquent dollars, coming in at 15.8 percent above the national average, followed by the Northeast at 13.9 percent above the national average.

 

 

October 2009

 

 

Six-month change

 

Risk score

Average DBT

Percent $ delinquent

Percent $ 91+

 

Risk score

Average DBT

Percent $ delinquent

Percent $ 91+

National average

60.68

5.23

12.1%

5.0%

 

-4.9%

37%

-4%

26%

 

 

 

 

 

 

 

 

 

 

Number of employees

 

 

 

 

 

 

 

 

Non-employer

61.15

4.64

9.1%

4.7%

 

-5.6%

31.2%

-10.3%

14.5%

1 to 4

61.76

5.49

13.5%

7.1%

 

-3.5%

37.7%

5.9%

27.8%

5 to 9

58.67

6.77

13.8%

6.0%

 

-3.1%

46.6%

6.6%

29.0%

10 to 19

57.26

7.01

15.2%

5.5%

 

-2.4%

36.5%

13.7%

32.1%

20 to 49

57.58

6.94

14.2%

3.9%

 

0.3%

26.2%

-1.4%

14.9%

50 to 99

57.61

6.72

15.5%

3.7%

 

1.9%

20.2%

-4.5%

19.2%

100 to 249

55.66

7.09

15.8%

3.6%

 

3.0%

15.3%

-14.5%

34.6%

250 to 499

55.06

7.66

14.2%

1.9%

 

6.4%

11.4%

-25.3%

1.0%

500 to 999

56.28

7.68

17.9%

2.1%

 

10.0%

7.3%

-16.9%

-10.6%

1,000 and over

34.10

5.44

18.2%

2.1%

 

-8.2%

-25.8%

-7.8%

29.4%

 

 

 

 

 

 

 

 

 

 

 

Risk score

Average DBT

Percent $ delinquent

Percent $ 91+

 

Risk score

Average DBT

Percent $ delinquent

Percent $ 91+

Industry group

 

 

 

 

 

 

 

 

 

Agriculture

65.59

4.78

8.12%

3.86%

 

-2.58%

37%

30%

40%

Mining

63.43

4.49

5.65%

0.89%

 

3.25%

16%

-60%

-61%

Construction

58.01

9.14

23.48%

9.14%

 

-3.92%

39%

6%

31%

Manufacturing

58.47

7.61

15.20%

4.21%

 

-2.09%

38%

-10%

71%

Transportation

56.61

7.07

12.48%

5.44%

 

-4.25%

45%

-15%

28%

Communications

56.50

7.84

17.58%

7.37%

 

-3.67%

69%

-5%

22%

Utilities

70.64

4.25

16.22%

5.46%

 

-1.90%

27%

5%

33%

Wholesale trade

59.43

6.71

12.94%

3.40%

 

-3.17%

41%

1%

27%

Retail trade

56.66

6.65

16.04%

5.53%

 

-2.53%

28%

1%

31%

Finance

57.42

6.92

15.91%

7.44%

 

-3.18%

64%

-7%

-9%

Insurance

64.97

5.09

7.45%

3.67%

 

-4.59%

78%

21%

36%

Real estate

60.71

5.62

4.90%

2.92%

 

-2.98%

59%

29%

59%

Hospitality

56.12

6.42

5.41%

1.60%

 

-2.46%

28%

-58%

-57%

Business services

59.78

7.20

14.31%

7.83%

 

-3.58%

53%

12%

57%

Health services

65.29

4.09

10.79%

3.51%

 

-1.57%

37%

0%

24%

Legal services

62.33

5.44

13.89%

8.30%

 

-3.45%

55%

13%

27%

Educational services

65.03

4.53

10.32%

4.41%

 

-2.25%

59%

8%

32%

Public admin.

65.12

4.28

13.60%

4.18%

 

-5.44%

42%

1%

59%


 

 

Risk score

Average DBT

Percent $ delinquent

Percent $ 91+

 

Risk score

Average DBT

Percent $ delinquent

Percent $ 91+

Region

 

 

 

 

 

 

 

 

 

Mid-Atlantic

62.57

4.39

13.1%

4.9%

 

-4.8%

56%

18%

57%

Midwest

61.54

5.35

15.8%

7.1%

 

-5.0%

22%

2%

27%

Mountain

60.40

8.03

7.9%

3.6%

 

-3.9%

8%

-58%

-48%

New England

62.19

4.02

11.3%

3.6%

 

-5.3%

52%

28%

57%

Northeast

56.77

3.95

13.9%

4.9%

 

-6.4%

58%

24%

53%

Northwest

63.30

6.71

13.0%

4.7%

 

-2.9%

24%

-7%

4%

Plains

63.23

4.67

12.5%

3.8%

 

-3.2%

21%

9%

27%

South Central

60.29

4.81

10.3%

3.7%

 

-5.1%

48%

-25%

11%

Southeast

59.16

6.06

13.3%

5.8%

 

-5.3%

49%

15%

50%

Southwest

61.23

4.86

9.7%

4.6%

 

-4.7%

39%

-18%

17%


To see a visual representation of this data and other information in an interactive map of the United States, go to http://www.BusinessCreditFacts.com/map.

Back to top



Test your business credit score IQ
Business credit scores are vitally important to small businesses. In today's competitive market, a faulty credit score can dramatically affect the bottom line of any business and can lead to higher interest rates, difficulty in securing loans and potential problems with suppliers. Conversely, a favorable credit history can serve as the linchpin to success. It not only can save a small-business owner a considerable amount of money, but it also can provide access to capital with which to grow the business.

As the majority of lenders reference commercial credit scores when making lending decisions, small-business owners should educate themselves on the importance of establishing and maintaining good business credit.

Particularly important is the understanding of what a small-business commercial credit score is and how it affects a business. Below is a quick test for business owners to determine whether their commercial credit score knowledge is as well-honed as is necessary to survive in today's thriving small-business market.

Take this quiz to ensure that your commercial credit score is working to help your small business rather than working against your bottom line.

TRUE or FALSE:

If I have a small business, I automatically have a small-business credit score.

There are no drawbacks to using my personal credit score, rather than a business credit score, when attempting to secure funding.

Anyone can request and view my business credit score.

There are things I can do to improve my business credit score.

Back to top



Basic facts every small business owner should know
Here are some basic facts every small business owner should know about business credit ratings:

Business scoring is much less regulated than consumer credit scoring. The process of scoring your business is much more complicated and less clear than the consumer scoring process.

Just because you have a business, don't assume you have a business credit score. Credit reporting companies require a minimum amount of information before they can generate a report and score for your business. To establish your business credit history, encourage vendors to report your payment history to one of the major credit reporting companies. Many credit reporting companies can provide you with information on suppliers who report to them.

Don't rely on your personal credit rating to finance your business. If your business becomes at risk, so will your personal credit score. Keep in mind that many creditors are now looking at scoring tools that consider both personal and business credit to predict small business risk.

Access to business credit scores and reports are not as restricted like personal credit reports. Business credit reports are available to the public, and anyone - including potential lenders and suppliers - can view your business credit report. This makes it imperative to monitor your business credit score and report.

You can proactively manage your business credit score. Ensure your vendors are reporting your business payment history, and monitor your business' credit on a regular basis. Experian's BusinessCreditFacts.com provides easy access to business credit reports and information about the business credit scoring process.

Back to top



Statistics about small businesses and their importance to the U.S. economy
Here are some interesting statistics on the importance of small businesses to the U.S. economy:

Small businesses contribute about 50% of the U.S. gross domestic product.

Two-thirds of new jobs are created by small businesses.

Financial industry spending on the small business market is expected to grow at 12.8% annual rate through 2009, according to the Tower Group.

89% of all U.S. businesses have less than $1 million in annual sales.

Millions of business have fewer than five employees, including 67% of service businesses and 60% of all retail.

Growth businesses — defined as growing 25% faster than normal — account for 27% of all U.S. businesses.

Nearly half — 46% — of all small businesses use personal payment cards. (Many small businesses fail to separate business and personal expenses, according to research conducted by MasterCard. Want to learn more about why it is important to establish a business credit report separate from personal credit? Click here.)

Source: Benchmarking and Blending: Keeping Watch on Both Details and the Big PictureMarch 2008

Back to top



Experian Announces Industry's First Online Triple Business Score Report

New service provides business credit scores from three major business information providers in a single report

Costa Mesa, CA, Mar. 15, 2010 — Experian®, the leading global information services company, today announced the availability of a new report that contains the business credit scores from three major business data providers in a single online report. Similar to the tri-bureau credit score reports that have been available to consumers for years, the new Triple Score Business Report(SM) is the first offering where business owners can obtain their commercial credit scores from multiple agencies at one time. "Business credit scores serve as the foundation for securing competitive business loan rates and the most favorable credit terms from potential suppliers," said Allen Anderson, president, Experian's Business Information Services. "As the economy begins to stabilize, it is more important than ever for small-business owners to be aware of their business credit scores in order to grow their enterprise."

Available at http://www.CompanyCreditScores.com, the Triple Score Business Report provides owners with three business credit scores that are delivered in an easy-to-understand A through E letter grade format. The site delivers access to the triple score report and provides business owners with an option to get more detailed business credit information from each reporting agency.

The Triple Score Business Report is available for $29.95. For more information, visit http://www.CompanyCreditScores.com.

For more information on Experian's business credit reports and services for small-business owners, visit http://www.SmartBusinessReports.com.

About Experian's Business Information Services

Experian's Business Information Services partners with organizations to establish and strengthen customer relationships, enabling them to mitigate risk and improve profitability. The company's business database provides comprehensive, third-party-verified information on U.S. companies of all sizes, with the industry's most extensive data on the broad spectrum of small and midsize businesses. By leveraging state-of-the-art technology and superior data compilation techniques, Experian is able to provide market-leading tools that assist clients in processing new applications, managing customer relationships and collecting on delinquent accounts. For more information about Experian's advanced business-to-business products and services, visit http://www.experian.com/b2b or call 1 800 520 1221.

About Experian

Experian is the leading global information services company, providing data and analytical tools to clients in more than 65 countries. The company helps businesses to manage credit risk, prevent fraud, target marketing offers and automate decision making. Experian also helps individuals to check their credit report and credit score and protect against identity theft.

Experian plc is listed on the London Stock Exchange (EXPN) and is a constituent of the FTSE 100 index. Total revenue for the year ended March 31, 2009, was $3.9 billion. Experian employs approximately 15,000 people in 40 countries and has its corporate headquarters in Dublin, Ireland, with operational headquarters in Nottingham, UK; Costa Mesa, California; and Sao Paulo, Brazil.

For more information, visit http://www.experianplc.com.

Contact: Roslyn Whitehurst
  Experian Public Relations
  714 830 5578
  roslyn.whitehurst@experian.com

Back to top