It is common practice for companies to use customer credit reports purchased from credit reporting agencies (CRAs) such as Dun & Bradstreet, but how accurate are they? A 2013 reports by the Federal Trade Commission states that one in every five Americans have a mistake on their credit report- that’s a 20% error-rate! While this may not speak directly to the accuracy of business credit reports, this makes you wonder, what must the error rate be on the business credit side?

It’s safe to assume that it is at least 20% if not more. What does this mean to you? Well, if you rely solely on credit reports for your customer credit information, there is a good chance you’ll be working with inaccurate data. It is important to understand which factors impact the accuracy of these reports so you can judge for yourself how much weight you should or should not be putting on the information you get from them.

The following factors impact the business credit report accuracy:


There are three main companies who compile business credit reports in the United States; Dun & Bradstreet, Experian, and Equifax. There are many other companies who provide this information, just be sure they are credible before you purchase their reports. Where your report comes from also matters because each of those three leading companies use their own algorithms, may or may not get their information from the same third parties, and could likely all have different information at any given time.


In many cases if there is incorrect data it’s not the CRA’s fault, it’s the fault of the lender providing them with their information; as Dan Meder, VP of Product Management for Experian Business Information Services stated, “at Experian, we’re just reporting what’s being reported to us.” While these companies and third parties do everything in their power to provide accurate information and reports, there are occasional mistakes and slip-ups that can lead to gross inaccuracies in the final report you purchase.


Credit reports are not real-time, so it can take anywhere from 30-45 days or more for a credit transaction, a purchase, payment, or missed payment to get from the creditor to the CRAs. This happens for a number of reasons:

  • Some creditors only provide information to CRAs when an account it past due or when a debt is written-off and deemed uncollectable.
  • Creditors are not legally required to provide information to CRAs on a regular basis. This means there are variations in reporting frequency among the lenders. Some creditors may be sending information to CRAs daily, others monthly, and some longer than that.
  • CRA update procedures must also be taken into consideration and add to the frequency of updates. Each has their own process for data integrity checks and reporting system.
  • No matter how often creditors are sending information, CRAs usually sync (update) their information monthly to coincide with their billing cycles. This is not a perfect science though since each CRA has their own billing cycle. Additionally, changes are made to their information faster or slower depending on when the credit transaction occurred in that billing cycle.
  • Updates by the CRAs, which are then reflecting in credit reports, occur faster when a transaction happens closer to the end of a billing cycle and slow when it takes place in the beginning of the cycle.
  • CRAs do not systematically get all of their information from every creditor on the last day of each month, so the updates come sporadically throughout the month, sometimes skipping months at a time.

With that being said, it is still good practice to use credit reports when you deem it necessary. Just remember that credit reports should not be the end-all-be-all of your research. They can be expensive over time, and you should take the information from credit reports with a grain of salt due to the factors listed above.


Rather than purchasing a credit report for a customer, ask for their financial statements directly from them or their accountant. This takes the CRAs and lenders completely out of the equation, therefore helping you avoid the risk of those reports being incorrect. “You’ll find that companies’ financials really speak for themselves,” said Doug Palmer, chief executive of Bethesda (Md.) accounting firm Palmer Financial.

Rely on trade references. Whether or not you decide to use credit reports as a part of your credit risk management strategy, you should always request trade references from your customers which can easily be obtained by asking customers to fill out a credit application.

Use your own data when possible (this is huge for companies who have access to the data). If you have worked with a customer in the past, your own data is the best source to determine the customer’s financial health and past behaviors, and continuing trends are the best way to predict future actions.

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