A Beginner’s Guide to Understanding Credit Data Services

Data is the cornerstone of business today, but it isn’t always easy to come by. Without access to credit data services, many companies struggle to find the information they need. Whether a business is working with individual clients or commercial organizations, having a breakdown of credit information can help make tough budgeting and financial decisions even easier. With the right tools, companies can always have credit, compliance, and fraud information at their fingertips.

Wardrobes of Bureaus

One of the reasons why it’s difficult for businesses to gather credit information is the nature of credit data as a while. There are three major reporters for personal credit that help banks and other organizations better understand how an individual manages their loaned finances. A good credit score is valuable for many reasons, and with comprehensive credit data services, businesses make better decisions about how to manage loans and finance opportunities.

While credit tracking has been around for over 100 years, the system has consolidated itself into the “Big Three” bureaus that report on individual data: Equifax, TransUnion, and Experian. These distinct companies each keep their own records on consumers, and whenever a person attempts to get a car loan or open a line of credit at least one of these organizations will be contacted. This valuable data is then sold to the interested party, facilitating decisions about loan terms and credit availability.

A Preponderance of Data

While consumers rarely contact credit bureaus to offer their own information, these organizations have their own ways of amassing all of their data. Businesses that open lines of credit or create personal and business loans freely connect with credit bureaus, giving them access to all of the information they need. The Big Three track a variety of statistics, including:

• Personal Information: Bureaus commonly tracked data including the customer’s previous or current name, address, and phone numbers along with birth, social security, and employment information.
• Public Records: These include bankruptcies, tax lien judgments, and collections data.
• Credit Requests: Companies also track how many times credit reports have been accessed, and by whom.
• Account Information: The Big Three keep track of how many open accounts a consumer has open along with their debt-to-income ratio.

Using a credit data service, businesses can get access to those reports and obtain a clear look at how risky it may be to do business with potential clients.

The Business of Commercial Credit

Credit doesn’t work the same when lending to a business. While a company’s score is just as important as an individual’s, the Big Three focus their gaze on consumers. There are other organizations that concern themselves with providing reliable information on business lending practices. The commercial versions of the Big Three are much more distinct in how they asses an organizations credit worthiness.

Dun & Bradstreet

While offering a variety of statistics pertaining to business credit, this firm looks primarily at three different scores:

• Paydex Score (1 – 100): Companies with scores of 80 or above are considered low risk, while lower numbers indicate a poor payment history.
• Delinquency Score (1 – 5): A low score here means less chance of late payments over 90 days.
• Failure Score (1,001 – 1,875): Higher-risk ventures may face bankruptcy or closings when companies have low scores in this category.

The Dun & Bradstreet scores can be accessed when a company files for a DUNS number for free through the company website.

Equifax

With a focus on credit risk analysis and data-driven marketing, Equifax reports on three distinct categories when looking at business credit.

• Payment Index (0 – 100): Higher scores reflect better payment histories.
• Credit Risk (101 – 992): A lower score here indicates a greater risk of missing and late payments.
• Business Failure (1,000 – 1,880): A prediction of business closure within the year.

While Equifax has its hand in both personal and business credit reporting, a credit data service can help companies manage both the commercial and consumer aspects of their credit analysis.

Experian

Another of the Big Three that also looks at the commercial sphere, Experian’s reporting not only grades businesses with several scores but also passes along data including account histories and repayment trends. The two important grades Experian offers are as follows:

• Business Credit Score (1 – 100): Higher scores are indicative of a positive payment history.
• Financial Stability Ranking (1 – 5): Companies should strive for lower scores, representing a less risk of bankruptcy.

Reports include reasons for rankings as well as collection filings and summaries of payment tendencies. 

The Necessity of Credit Data Services

Whether you’re a business that deals mainly with the consumer or an organization that works with commercial entities, having a credit data service can help change the way you look at the information. Not only can such functionality help make better financial decisions, but it can also give you important information about your own organization. With a comprehensive system, it’s easy to make all of that important credit data work for you!