A business credit bureau is an agency that collects and researches data on businesses and sells it for a fee to lenders and credit issuers to make lending decisions. It may also be called a commercial business credit reporting agency, or a corporate credit bureau.

A business credit history is the number of trade payment experiences which are reported on business credit reports. This includes payment terms.

Establishing business tradelines is the act of applying to and using accounts that report to the business credit bureaus.

These are reports produced by business credit bureaus highlighting a business foundation, and reporting business credit history, scores and ratings. These reports are compiled to help lenders and business owners access risk. 

A business credit profile is all the information included on all your business credit reports including all your business tradelines, business information, and business credit scores. Building your business credit profile means to improve accuracy and accumulate positive experiences and information which present your business in a favorable light.

A personal guarantee is an individual’s legal promise to repay credit issued to a business where they are an owner, executive, or a partner. 

With business credit agreements, giving a personal guarantee essentially makes you a co-signer on the business credit account. You will remain liable for any debts the business incurs. You have given a “personal guarantee” that you will be responsible for the debt.

In practice, this means that your personal credit will undergo a hard inquiry, since you are putting your Social Security number on the credit application. With enough hard inquiries, your personal credit score will be adversely affected.

A trade vendor is a vendor that issues trade credit, and trades product or services.

Trade credit is issued by vendors to businesses for the purchase of goods or services.

A vendor account is an account issued to a business with a vendor. It is sometimes reported to the business credit bureaus. The term trade account is common, but it is more accurate to call this account a vendor account.

Business tradelines are vendor accounts reported by the vendor to a business credit bureau. This information is included in a specific location in a business credit report.

When a businesses’ payment activity in relation to  a new or continuously reported tradeline is recorded by a business credit bureau.

A continuously reported business tradeline is one that is over 6 months old that has reported multiple payment experiences.

A business tradeline is referred to as newly reported if it is up to 6 months old and has reported payment experiences.

EIN stands for Employer Identification Number. It is a nine-digit number assigned by the IRS, used to identify the tax accounts of employers and certain others with no employees. The IRS uses the number to identify taxpayers who are required to file various business tax returns. EINs are used by employers, sole proprietors, corporations, partnerships, nonprofit associations, trusts, estates of decedents, government agencies, certain individuals, and other business entities. Get your EIN for free directly from the IRS.

A credit inquiry is when a lender pulls someone’s personal credit record. It creates a record in a credit report of each time the borrower, a lender or a potential lender gets a copy of a person’s credit report. Credit inquiries, especially multiple inquiries, may negatively impact credit scores. 

Hard Inquiries

In a hard inquiry (also called a hard pull), a potential lender checks a person’s credit report. An occasional hard inquiry will only have a small negative impact on a credit score. But hard inquiries stay on a credit report for two years. Several hard inquiries over a long period will hurt a personal credit score the most. This is because they are viewed with suspicion, as they could signal the borrower has fallen on hard times.

Soft Inquiries

A soft inquiry (or soft pull) is a credit report check that does not affect a borrower’s credit score. Soft inquiries come from evaluations not resulting in the granting of credit. For example, you can check your own credit as much as you like without it affecting your score. Another type of soft pull is periodic checks by existing creditors. It’s also a soft inquiry when credit information is pulled by insurance companies while deciding whether to offer insurance. That’s right: business credit and underwriting go together.

You may be wondering: do business credit inquiries hurt my credit?  Unlike with personal credit, anyone can pull your business credit reports. This does result in inquiries.

However, unlike with personal credit, business credit inquiries don't negatively affect your Fundability or business credit scores with each business credit bureau.

NAICS (North American Industry Classification System) codes classify businesses by industry. As an example, a dry cleaning business would come under 812320 Drycleaning and Laundry Services (except Coin-Operated).

The NAICS codes are the standard used by Federal statistical agencies in classifying business establishments for the purpose of collecting, analyzing, and publishing statistical data related to the U.S. business economy.

The IRS also uses NAICS codes. While reviewing your business tax returns, the IRS will compare yours with other businesses in your industry, to make sure that your claimed deductions are sufficiently similar to those of your industrial peers. 

Standard Industrial Classification (SIC) codes are four-digit numerical codes assigned by the U.S. government to business establishments to identify the primary business of the establishment. 

SIC codes are being replaced by NAICS codes, but organizations such as Dun and Bradstreet still use SIC codes or even both. 

Two of the bigger differences between SIC and NAICS codes are that the NAICS codes list is more detailed, and it does not differentiate between online and offline businesses.

When it comes to financing your business, you may think that business credit and loans are 100% separate. But the truth is, they aren’t.

In particular, business owners with bad credit can have their good business credit help them get loans. After all, business credit is one of the 5 main Fundability principles. When a lending institution has more than just your personal credit scores to look at, they will review any other information which they believe will better answer their one big question: will you pay them back?

Because it’s possible to have good business credit with bad credit on the personal side. But if your business credit is good enough for a lender, they will weigh it more heavily in their decision.

Business Credit: How it Works When Seeking Loans
Lending institutions will let your business credit guide them as they pull your business credit reports and look for a few things.

- Do you pay your bills on time?

- Are there a lot of negative/derogatory items on your credit reports, such as lawsuits or liens?

- How long have you been in business?

- Is the business credible?

Does the information on the business credit report match the information received on the application?

If the answers to these questions satisfy the lending institution, then you’re more likely to get a loan, although it will not necessarily be for exactly the amount you were originally seeking.