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How to Buy a Self-Serve Business Credit Report to Know If Your Customers Will Pay

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Chamsi Pirson

Even in a recovering economy, experts predict bankruptcies and credit defaults to be higher than normal through the next two years. The leveraged loan default rate is predicted to end 2021 at 4.76% after a peak of 6%. That rate would be the highest since 2008-2009.

2020 saw a 29% increase in Chapter 11 bankruptcies and more are ahead. Bankruptcies typically lag behind economic events. In the 2007 financial crisis, bankruptcies did not peak until 2010.

If you are extending credit to customers and clients, you need to know that they are financially healthy and will be able to pay their bills. When you pull a credit report for business, you will be armed with the information you need to make better business decisions and mitigate your risk of not getting paid.

How to Buy Business Credit Reports

Experian, Dun & Bradstreet, and Equifax — the three major business credit reporting agencies — provide an overall credit summary score and use predictive analysis modeling to assess risk. When you buy business credit reports, you get the information you need to gauge how much of a risk you are taking when extending credit to customers.

Buying a business credit report is easier than you might think. While consumer credit reports require you to get a customer’s permission first, you do not need permission to pull a credit report for business.

You can go online, enter a business name, and download their business credit report instantly. For example, accredit’s self-serve website lets you choose from several different reports from different credit reporting agencies without having to sign up for a subscription.

Will a Business Credit Report Tell Me If a Customer Will Pay?

While there is no guarantee that a customer will pay, when you pull a credit report for business, you will see how they are handling credit with others.

Each of the three business credit reporting agencies also uses a company’s payment history with other lenders to produce an overall credit score and to forecast future behavior.

A business credit report from Equifax includes a repayment risk score and financial stability score to help you assess risk. An Experian business credit report also includes a financial stability index that analyzes trends to predict the likelihood a business will experience severe financial stress within the next year. Dun & Bradstreet’s business credit report includes a viability score and total loss predictor score that predicts the potential of a business to close its doors or go delinquent on its bills.

Business credit reports may also provide other information that can you with your decision-making, including:

  • Public records searches, including bankruptcy filings, tax liens, judgments, pending lawsuits, and UCC filings
  • Payment history, including bills paid days beyond terms
  • Outstanding credit balance by account
  • Delinquencies and charge-offs
  • At-risk balances
  • Business identity information, including owners, subsidiaries, and parent companies

When you pull a credit report for business, all of this information helps you evaluate your risk. By tracking these data points, business credit reporting agencies look for anomalies that may indicate signs of financial stress. This information can give you an early warning before you extend credit.

What You Should Know Before Extending Credit to Customers

The percentage of delinquent dollars that are 91+ days past due has been rising steadily since mid-2020. In Q1 2021, the number had risen nearly 4% from last year’s highs. Even customers that have been paying their bills on time for years may be struggling to make payments. Things may look fine on the surface, but an independent business credit report can show you what is happening behind the scenes.

It is smart business to know the financial health of your customers before you extend credit. If a business credit report shows your customers are paying their bills on time and using credit responsibly, it can give you the peace of mind you need when extending credit.

If there are warning signs of financial stress, such as credit defaults with other creditors or delinquencies in paying bills, knowing this information can protect you from making costly mistakes. You may require upfront payments, a larger deposit, or limit credit amounts or terms before agreeing to do business with customers.

Pull a credit report for business to get the facts about a customer’s payment history and financial situation to better control your risk factors and protect your business.

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Chamsi Pirson
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