Published By Janet Gershen-Siegel at August 3, 2017
Is your business credit score nothing to write home about? Was it good once but now, not so much? Here are three easy and effective ways to repair your business credit and get back on track.
Perhaps the easiest way to fix your business’s credit is to assure that all of the reporting on it is correct and complete. So the first thing you want to do is, request your reports.
FICO’s SBSS (Small Business Scoring Service) Score will be generated when you apply for a loan. The lender will send your company’s documents and information to FICO. Then FICO will collect more data from the credit reporting agencies (Equifax, Dun & Bradstreet, and Experian).
A PAYDEX Score works as Dun & Bradstreet’s dollar-weighted numerical rating of how your company has paid the bills during the last 12 months. Get your PAYDEX report here and you can contact their Customer Service department here.
Order your business’s Equifax report here.
You can order your company’s Experian report here.
You need to tell the reporting agency, in writing; just what you think is wrong. Make sure to enclose copies of any document you have, such as cancelled checks or receipts (Keep the originals!). Itemize and specifically say what is wrong. That is, don’t just say that the report is wrong; tell the reporting agency that an item from May 24 is incorrect because of what you did to pay that bill, and attached is the payment information.
When sending a paper letter, use certified mail so that you have a record that you mailed in the dispute. Make sure your full and complete name and address are on not only the envelope, but also the letter. Keep copies of everything you send, from the cover letter to the enclosures. You may need to prove you sent the letter, so keep all of these items in a safe place.
Credit reporting agencies take these disputes seriously and are required to launch an investigation within 30 days of receiving your information (under the Fair Credit Reporting Act). They have to send you the completed investigative report in writing, including a free copy of your report if anything changes. In addition, you can ask the agency to send a corrected copy of your credit report to your creditors.
Because this score comes from the other scores, your recourse for disputing it is to dispute your company’s scores with Experian, PAYDEX, and Equifax.
You can find D & B’s PAYDEX Customer Service phone number here.
You can dispute your company’s Equifax report by following instructions here.
You can dispute your Experian report by following the directions here.
Much like you disputed the charges to the reporting agency, you will also need to dispute them to the creditor itself. Again, you will need to make your case in writing and enclose copies of any proof of payment. Be specific about what you are disputing.
Your Credit Utilization Rate (sometimes called your Balance-to-Limit Ratio) is a formula: Credit Debt divided by Total Credit. Therefore, if you have $1,000,000 in total credit, and you are carrying $250,000 in credit debt, then your credit utilization rate would be 25%. This matters because credit scoring models often take this figure into consideration. In general, you want to keep this percentage under 30% so, in the example, the utilization rate is at a good level.
There are two ways to decrease your credit utilization rate:
The first option is almost always the better way to go. You want to reduce your debts. Increasing your credit limits can create temptation to overspend on the higher limit – and then your business would be in even more of a bind. So try the first option, which leads right into #3.
Fixing credit issues means you need to fix bad habits and not repeat them. Mostly importantly, this means paying your bills on time and as completely as possible. A bonus to paying on time and in full (or as close to in full as you can) means you pay considerably less interest on your debts.
Why is your personal credit score important to your business credit score? Because for small and new (or both) businesses in particular, lenders will often look to your personal credit history before deciding whether to extend business credit. Keep your personal credit score in good order, and bring those same good practices to your business, and your business credit score will eventually rise as well.