Published By Janet Gershen-Siegel at August 2, 2017
Do you know where to establish business credit, and how? Building and improving your corporate credit isn’t so hard. And once you understand what is considered a good business credit score, then you can work toward making your company’s credit score the best it can be.
If your business does not have one, these are easy to get. You will need to file for a DUNS number via Dun & Bradstreet’s website. The number is free. The DUNS number is necessary to get you into D&B’s system – which leads me to #2.
Before you get started, you should know where business credit is reported. There are three credit reporting bureaus, Equifax, Experian, and Dun & Bradstreet (their service is called PAYDEX). They each have slightly different ways how a business score is calculated. But right now, all you want to do is request your business credit reports. You can do so by clicking on the above links. They all get started with the DUNS number, so get that first.
In case you’re wondering what is considered a good business credit score, it is:
If you’ve ever wondered, how does a business credit score work, part of that has to do with how quickly and thoroughly your business pays its bills. So if any of your credit reports are incorrect, you will need to formally dispute that. You can do so by providing receipts with a formal dispute. The various bureaus have slightly different means of doing this. However, they all require a written dispute and they all want to see copies of your receipts (be sure to keep the originals!). You need to itemize and be specific about what is wrong. That is, if you have a bill for five separate articles and the credit reporting bureau thinks you only paid for two of them, you will need to spell out exactly which line items you are showing receipts for.
You can dispute your company’s Equifax report here. Dispute your Experian report by following the directions here. And you can find D&B’s PAYDEX Customer Service phone number here. Stay on top of these as a priority because they are easy to fix and the fix will ripple through your scores.
When your name stays on the bills, credit reporting bureaus won’t see your business developing a good payment history. And when you keep using your personal credit cards, your business won’t get a chance to pay those debts. Make everything crystal clear for the credit reporting bureaus and get these business-specific items from the bank where your company does business.
While it may seem easier said than done, building corporate credit means keeping on top of your business’s bills. If you have ten days to pay, make sure you’ve paid by day nine, or day ten at the latest, and not day eleven. If that is not possible, then you are going to have to try to find ways to be more responsible with business credit. This can sometimes mean scaling back ambitions and borrowing less. It can also mean paying closer attention to risk. For example, if your business depends on pistachio nuts, it might be directly affected by the political situation in the Middle East, given that so much of the pistachio crop is grown there.
Credit utilization, as you might expect, is the credit you’re using as a percentage of your total available credit. In general, credit reporting bureaus do not want to see this percentage go above about 30%. The good news is that reducing your credit utilization should also directly improve #4 (improving your payment history).
Use a service like AnnualCreditReport.com to get your credit report from Transunion (they monitor personal credit only), Equifax, and Experian. Why? Because, particularly for very small or very new businesses (and it goes double for corporations which fit both criteria), the big credit reporting bureaus will often look at personal and corporate credit together. So you will need to stay on top of mortgage payments, student loan payments, car loan payments, and the like.
Personal bankruptcy will also affect your personal credit score which, in turn, will affect your business credit scores.
And, be patient! Much like Rome, corporate credit can’t be built in a day.