Make it or Break It: Your Experian Background Check

Experian does more than just credit scores.  They also provide a background check service.  Not just for you personally either. They have 2 different business background check reports they can provide. Many people are scared of what it on their background check because it can make or break your chance at funding.  It is vital that you know what type of information lenders are seeing when they run an Experian background check on your business. 

An Experian Background Check on Your Business May Contain More than You Expect

There are two different Experian background check reports for businesses.  Experian refers to it as tenant screening. They offer this for individuals as well as businesses. The two different reports are the Business Profile Plus Report and the Business Credit Score Report.  Before we get into the detail of each of these however, you need to understand the Experian business credit scoring process. Your business credit score affects each of these reports. 

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Experian Background Check: Intelliscore Plus

The Intelliscore Plus credit score is a credit-risk evaluation based on statistics. The goal is to help those offering funding make decisions about whether or not your business is a good investment.

It’s similar to how lenders use your personal credit score. Before they decide to lend money to you, they check your credit score.  The Intelliscore Plus can provide an idea of the credit risk associated with a specific business. 

Intelliscore Plus Credit Score Range

The scores range from 1 to 100.  The higher your score, the lower your risk class. Alternatively, the lower your score, the higher your risk class. The chart below describes each range and what it means to lenders.

Score Range Risk Class

76 — 100 Low

51 — 752 Low — Medium

26 — 503 Medium

11 — 254 High — Medium

1 — 105 High

How Is an Intelliscore Plus Credit Score Calculated?

In the credit world, Intelliscore Plus is one of the best tools for predicting risk. One reason is that they identify key factors that show how likely a business is to pay their debt.

There are over 800 of these factors.  However, they can all fit into the following general categories.

Payment History 

Not surprisingly, this is how well you are making payments. It includes the number of times your accounts become delinquent.  It also shows the percent of accounts that are currently late.  Your overall trade balance is listed too. 

Frequency 

Frequency refers to the amount of times your accounts have been sent to collections.  It  includes the number of liens and judgments you may have. Any bankruptcies related to your business or personal accounts also show up here.

In addition, frequency has to do with your payment patterns. Were you regularly slow or late with payment? Did you start off paying bills late but get better over time? 

Financial 

This specific factor focuses on how you use credit. For example, how much of your available credit is currently in use? Do you have a high ratio of delinquent balances in relation to your credit limits?

If you are about to start a business or are somewhat new to this game, the list above may seem a bit overwhelming. If your business is not yet in operation or you do not have a long history of business transactions, how will they rate you?

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In this case, a blended model is used to establish your score. That means they consider your personal consumer credit score with your business’s credit score.

Experian Background Check: Commercial Tenant Screening

When it comes to a business Experian background check, there are two different options.  They each contain similar information. One is just more detailed than the other. As a result, there is a slight price difference between the two reports as well. 

Business Credit Score Report 

According to Experina, this contains summary information on the following: 

  • Business Address, Key Personnel, Sales, Total Employees and SIC Code/Description
  • Credit Ranking and Key Score Factors
  • Payment Summary
  • Collection, Tax Lien and Judgment Filings

This report costs $39.95. 

Business Profile Plus Report

This is the more detailed version of the Business Credit Score report.  It includes detailed information on the following: 

  • Business Address, Key Personnel, Sales, Total Employees and SIC Code/Description
  • Credit Ranking and Key Score Factors
  • Trade Payment Detail and Trends
  • Inquiries
  • Collection, Tax Lien, Judgment and UCC Filings

This report costs $49.95. 

Surprising to many is the fact that so much more than credit history is included in the Experian background check.  Of course, often there is no background check when simply applying for a business loan. The thing is, Experian offers reports that contain similar information to lenders as well as potential landlords. Basically, they are providing a more complete picture of overall fundability.  Of course, that is affected by much more than the business credit score. 

Other Experian Reports

In addition to the reports offered with the Experian Background check, Experian offers a number of other products.  These include reports designed to help you as the owner monitor your business credit.

  • Business Credit Advantage Plan

This one is currently $149 monthly and contains mobile-friendly alerts and score improvement tips.

  • Profile Plus Report

This report is currently priced at $49.95.  It features comprehensive financial payment data and predictive information on payment behavior.

  • Credit Score Report

This is the least expensive of the reports, currently priced at $39.95. Basically, it includes comprehensive business and credit information.  Also, there is a summary of financial payment data.

  • Valuation Report

This report sells for $99 right now. It shows the value of your company and contains Key Performance Indicators. Additionally, it shows your business’s fair market value.

Premium Corporate Profiles

Experian also furnishes premium corporate profiles at an additional cost. The enhanced profiles contain even more detail including: 

  • Sales figures 
  • size 
  • contact details 
  • products and operations 
  • credit summary 
  • any Uniform Commercial Code (UCC) filings 
  • fake business names 
  • payment and collections history 

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This is in addition to the data supplied in their basic corporate profiles.  They also have information on credit inquiries made in the past nine months.  

Keep an Eye on What Experian Has on Your Business with Credit Alerts

Not surprisingly, you can subscribe to business credit alerts. Experian’s Business Credit Advantage program serves as a self-monitoring service. You get unlimited access to your business’s business credit report and score. You can make use of this tool for proactively handling your business credit. Alerts are sent for:

  • Company address changes
  • Changes in your business credit score
  • Credit inquiries on your business profile
  • Newly-opened credit tradelines
  • Any USS filings
  • Collection filings and
  • Any public record filings, for example, liens, bankruptcies, and judgments

By taking advantage of this, you can always be ahead of the game.  Then, you won’t have to be surprised by what your Experian background check turns up.

What if There is a Problem with your Experian Background Check?

Experian Reporting and Scores Credit Suite

Experian Reporting and Scores

While there are many problems that could potentially pop up, the business credit score issue is one of the most common.  It is possible to improve it however. Here’s how.

Make On-Time Payments Consistently

Paying your bills on time will help establish your small business as one that meets financial obligations. This will eventually help push your score up.  As a result, lenders will view your business as low risk.

Use the Credit

Keep your debt low.  That’s good advice.  Still, opening business credit accounts can help raise your credit score. The key is to use all credit responsibly.

Keep Your Personal Credit in Check 

By now, you’re aware that your personal credit is fair game when it comes to your Intelliscore Plus score. Running a business is hard work.  However, don’t let your personal finances suffer. See to it you stay on top of your personal debt.  Steer clear of credit checks that are not necessary.  Basically, do not compromise your personal credit for business needs.

Your Experian Background Check and Fundability

Many of the factors that show up on your Experian background check reports are fundability factors.  There are fundability factors that will not show up directly on these reports. However, some will still affect your report indirectly.  Others are outside of the reports all together. You need to know what they are and understand how they can affect your ability to get funding. 

Factors that Affect Fundability

Here are a few things you need to keep on your radar when it comes to your Experian background check and managing fundability.

Other Business Data Agencies 

There are other agencies that collect business information.  The information these businesses have can indirectly affect reports from business credit agencies.  Two examples of this are LexisNexis and The Small Business Finance Exchange. These two agencies gather data from different sources.  Those sources include public records.  That means they could have access to information relating to automobile accidents and liens. You may not be able to access or change the data these agencies have on your business.  However, you can ensure that any new information they receive is positive.  Enough positive information can help distract attention from negative information. 

Business Information

On the surface, it seems obvious that all of your business information should be the same across the board.  However, when you start changing things up, like adding a business phone number and address or incorporating, you may find that some things slip through the cracks. 

This is a problem because of fraud concerns.  When business information doesn’t match up, it sets off alarms.  Maybe your business licenses have your personal address but now you have a business address.  You have to change it.  Perhaps some of your credit accounts have a slightly different name or a different phone number listed than what is on your loan application. Do your insurances all have the same information?  

The key to this piece of the business fundability is to monitor your reports frequently.   

Financial Statements

Both your personal and business tax returns need to be in order.  Not only that, but you need to be paying your taxes, both business and personal.  

It is best to have an accounting professional prepare regular financial statements for your business. Having an accountant’s name on financial statements lends to the legitimacy of your business. If you cannot afford this monthly or quarterly, at least have professional statements prepared annually. Then, they are ready whenever you need to apply for a loan. 

Often tax returns for the previous three years will suffice for personal financials.  Get a tax professional to prepare them.   This is the bare minimum you will need. Lenders may also ask to see check stubs and bank statements. 

Bureaus

There are several other agencies that hold information related to your personal finances that you need to know about.  For example, many business owners do not realize that their ChexSystems report can affect fundability.  In the simplest terms, this details any bad check activity.  It makes a difference when it comes to your bank score.  If you have too many bad checks, you will not be able to open a bank account.  

Everything can come back to bite you.  Have you ever been convicted of a crime? Do you have a bankruptcy or short sell on your record?  How about liens or UCC filings? All of this can and will affect your Experian background check and the fundability of your business. 

Personal Credit History

Your personal credit score from Experian, Equifax, and Transunion all matter.  You have to have your personal credit in order because it will definitely affect the fundability of your business.  If it isn’t great right now, get to work on it.  The number one way to get a strong personal credit score or improve a weak one is to make payments on time, consistently. 

Also, make sure you monitor your personal credit regularly to ensure mistakes are corrected and that there are no fraudulent accounts being reported. 

The Application Process

Sometimes your ability to get funding doesn’t have as much to do with your credit.  Sometimes it has more to do with your timing and application. First, consider the timing of the application.  Is your business fundable right now?  If not, do some work to increase fundability.  

Next, make sure that your business name, business address, and ownership status are all verifiable.  Lenders will check.  Lastly, make sure you choose the right lending product for your business and your needs.  Do you need a traditional loan or a line of credit? Would a working capital loan or expansion loan work best for your needs?  Choosing the right product to apply for can make all the difference. 

Watch Your Back 

When it comes to your business, you have to watch your back.  Everything you do can affect your ability to get funds, even if it is on your personal credit.  However, the more your business builds strong fundability of its own, the easier the process will be despite your personal finances.  Watch your back. Make payments. Make sure all your information is consistent across the board. What do you need to know about your Experian background check?  It probably says more than you think. However, if you follow our suggestions, it is more likely to help you than hurt you. 

The post Make it or Break It: Your Experian Background Check appeared first on Credit Suite.

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