Most people are familiar with — or at least aware of — consumer credit reports. Most people also know they have a credit score based on their payment histories. They expect debtors to report most of their installment payments to the bureaus. But fewer people have ever heard of business credit reports, or the option of reporting commercial, or trade, credit.
Similarities in reporting commercial and consumer credit
Reporting commercial credit is similar to reporting consumer or personal credit in some ways. Data furnishers provide similar information regarding on-time and late payments and the amount of available credit to the credit bureaus. They then use this information to generate credit reports and scores.
Additionally, both commercial and consumer data furnishers must convert their data into a particular format. They also require data furnishers to complete an initial application and various business information to become qualified to report.
However, that’s where the similarities end. If you’ve reported personal credit to the bureaus and would like to begin reporting your commercial clients, here’s what you need to know.
1 – The “big three” consumer credit bureaus aren’t the same as the “big three” trade credit bureaus
Consumers usually recognize three major bureaus, or credit reporting agencies (CRAs): Experian, Equifax, and TransUnion. A fourth popular option is a newer CRA, Innovis. When it comes to commercial credit, though, the big three bureaus are Experian, Equifax, and Dun & Bradstreet. TransUnion offers a business credit reporting service, but it’s not as recognizable as the other three. In fact, there are more than 30 business credit reporting agencies in the U.S.
2 – You have more options for formatting your business credit data
The industry standard format for consumer data reporting is called Metro 2. The major CRAs created Metro 2 Format to ensure that all data furnishers meet federal consumer reporting requirements. Commercial CRAs will accept Metro 2 Format, but they don’t require it. They offer several other format options, and as long as your data adheres to one of those, your file will be accepted.
3 – Business data furnishers don’t have to register for e-OSCAR
E-OSCAR (Online Solution for Complete and Accurate Reporting) is an automated dispute system for consumer credit. The CRAs agencies created it to alleviate the growing amount of manpower needed to process consumers’ claims of mistakes on their credit reports. There is no such entity that handles commercial credit disputes for data furnishers or businesses.
4 – Each commercial CRA scores credit differently from consumer scores
Experian Business, Equifax Small Business, and Dun & Bradstreet each use their own algorithms and criteria to create credit or risk scores. These scoring models are different because business creditworthiness incorporates more information than just that offered by courts and data furnishers. Commercial CRAs can also take into account a company’s UCC filings, financial reports, business size and age, press releases, government contracts, and more. That means the information you report is just one (very important) piece of a much larger puzzle.
5 – Business credit reports are available to anyone, but not for free
The Fair Credit Reporting Act (FCRA) requires that the three major consumer credit bureaus provide every consumer with one free credit report every 12 months. Because the FCRA doesn’t apply to commercial entities, most trade credit reporting agencies charge a fee to access each report. Plus, this information is readily available to anyone who wants to purchase the report or access a business credit or risk score.
Ready to start reporting?
Now that you know a little more about reporting commercial credit, why not get started reporting your business client’s debts and payments today? Let Datalinx’s experienced team help you get set up to report commercial credit to Experian, Equifax, Dun & Bradstreet, or other trade CRAs. We’ll work with you to package your data in an acceptable format and transmit a test file to the CRA. Then we’ll make sure that every file you send each month will be accurate and on-time. We’ve been in the business of helping businesses like yours for nearly 20 years, and we’d like to add you to our list of satisfied clients!
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