Business Credit Reports

Business Credit Reports

Business credit reports have become a part of the business world. Business credit reports help in assessing the creditworthiness of businesses. Corporations and banks now look at the credit history of a business before extending credit. The use of business credit reports for finding new customers is also increasing.

Business credit reports contain background information besides other company details such as loans, public filings, leasing, banking relationships and trade payment trends. In the past few years, value addition to the business credit reports in the form of ratings and credit score has caught on. A credit score is calculated by comparing the credit information on a business to that of similar businesses. The credit score reveals the creditworthiness of a business. Additional ratings relating to payment have also become common.

The credit information services market is divided into two segments:

• Consumer credit reports
• Business credit reports.

The credit information on consumers is used by businesses such as banks and retailers for taking lending decisions. The leading credit reference agencies in the consumer credit information segment include the US-based Equifax, the UK-based Experian and the US-based TransUnion.

Business credit reports, are used by banks and suppliers to extend credit to businesses. The share of business credit reports in the credit information market is currently small, but growing fast. The key players in the business credit reports market segment include Dun & Bradstreet, Graydon, Experian, Equifax, Coface and Creditreform. In Europe, the credit reporting agencies have polarized into three information networks: BigNet, Eurogate and Dun & Bradstreet.

Leading Players for Business Credit Reports

Dun & Bradstreet is the leader in the business credit reports segment. It covers 92 million businesses in over 200 countries. Some credit reference agencies focus on segments such as small businesses. Equifax, for instance, claims "We have unique source of small business credit information in the USA.

Official statistics on the size of the credit information market are not available, but the revenues of leading credit reference agencies provide valuable insights. The financial results of TransUnion are not in public domain, but those of Equifax and Experian are. Equifax reported operating revenues of US$1.27 billion for 2004 while Experian, a division of GUS plc, reported sales of £1.36 billion for the year ended March 31st 2005.

The credit information market is largely concentrated in North America. The share of North America in Equifax's revenues stood at 82 per cent in 2004, which is more or less the norm for the industry. Experian, however, is an exception to the norm, generating 46 per cent of 2004-05 revenues from international operations. North America accounted for 54 per cent of Experian's revenues.

Furthermore, the sale of consumer and business credit reports account for a large share of credit reference agencies' revenues. The information services business of Equifax in North America, for instance, accounted for 56 per cent of the operating revenues in 2004. Experian derived 46 per cent of sales from information services. Obviously, most of the information services revenue originates from consumer credit reports. While consumer credit reports are expected to remain the largest segment, business credit reports are likely to improve their share of the credit information market.

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