Attaining a high credit score is every small business’s dream. A recent survey by manta shows that 72% of micro-businesses have no idea about their credit score, nor do their owners have separate credit scores for business and personal use.
Loans are just one reason you must build a strong credit score. Secondly, a desirable credit score goes a long way in upgrading your business. Your credit score will determine if your partners will trust you with large projects or even extend your credit.
Get started on your business credit score today to grow your business to greater heights.
What are credit bureaus?
Credit reporting agencies or sometimes referred to as credit bureaus are organisations that record the consumer’s credit information and sell it to businesses as credit reports.
In the U.S there are three major credit reporting agencies: Experian, Equifax and TransUnion as well as smaller specialised agencies.
Lenders and creditors are most likely to use the data from the three major companies to determine their consumer’s loan credibility since they entail information of more than 200 Million Americans. The CRAs are not government owned but are instead publicly traded.
Credit bureaus operations are controlled by the Fair Credit Reporting Act( FCRA) as a law in the federal government.
What credit bureaus do
Credit information from citizens is available to the credit reporting agencies through the lenders and companies that you do business with. Lenders update the information regularly to keep up with the progress of loans you have taken, payments you have made and the intervals of payments. This information is passed on to credit bureaus.
Credit bureaus also retrieve relevant information from public records such as tax liens and bankruptcy information from local and state courts.
Companies can access this information from credit bureaus with a legal and valid reason like when a lender wants to access your credit history to determine your creditworthiness. Businesses also use this information to know what customers need and use this to tweak their products and services to what consumers are mostly spending money on.
Landlords and employers cannot access this information without your consent.
Let’s take a peek at the three major credit reporting agencies:
Experian
Experian collects information such as credit obligations, marketing databases and legal filings from private and public sectors.
They calculate business credit score between 0-100 with a higher score being best, unlike their competitors.
The Experian score is essential in evaluating businesses that prefer vendor terms to bank loans. You can achieve a low-risk rating in your business by having an impeccable credit history over some time.
Equifax
Equifax was founded in 1899 and has been around until now despite a major hack in 2017 that led to a data breach of personal information of 143 million
They have since made a comeback and provided a tool on its site that you can use to check whether you were affected. The company has also attempted to make amends by offering consumers whose information were accessed with a credit monitoring service for free.
Equifax provides services on fraud protection and identity theft to citizens while also selling credit reports to businesses.
TransUnion
Originally a holding company for a tank car company, TransUnion branched into credit reporting. If you suspect that you’re a victim of identity, you can freeze your TransUnion credit report, and TransUnion will go an extra mile to notify the other two CRAs that you’ve done so.
A credit monitoring service is also available at a fee.
Final remarks
You are entitled to view your credit report at least once a year sent from your preferred credit bureau. If you’ve been turned down by any lender, you also receive a credit report free of charge if you make the request within 60 days of being declined. Get your credit report today to determine your loan credibility.