Published By Janet Gershen-Siegel at July 23, 2018
Written by Janet Gershen-Siegel
Do you need business credit information? Then read on.
Your best option as a business owner is to remain on top of your small business credit reports from PAYDEX, Equifax, and Experian. There are three big credit reporting bureaus for businesses and you absolutely need to check all three of them on a regular basis as they use moderately different touchstones. Hence moving the needle for one can move the needle for the two others, although possibly not as much.
Do not let your company credit scores slide, as you should catch any mistakes quickly as you can, as well as identify anything which is dragging your scores down and then take remedial action. You can obtain your reports easily and stay right on top of all three scores by following a few straightforward steps.
Dun & Bradstreet’s PAYDEX score of your small business can wind up being among the main reasons that your company gets credit at all. D & B offers Credit Signal, which is a means to track your credit score by having the reports come immediately to you, for a fee.
You may find the charge is well worth it in order to avoid the bothers that can arise from letting this score slip, and to not have to develop and handle the organizing and reminders you might need to keep up with if you do not utilize it.
Don’t want to make use of Credit Signal? That’s fine, as you can receive your PAYDEX report through D & B and, if need be, you can contact their Customer Service department (this department exists as a section of Dun & Bradstreet itself). Additionally, in order to review your PAYDEX report, check out what D & B provides, which is a sample report and also some higher level recommendations in ways to interpret it.
Equifax one of the big credit reporting agencies, offers a risk monitoring service which is easier as it allows for reports to come straight to you. If you do not want to shell out money for regular reports, you can alternatively order your business’s Equifax report. In addition, if you need to question your business’s Equifax report, you can do so by following the information on their site. You can learn to go over your Equifax report by taking a look at a sample of their reports.
Experian, one more big credit reporting firm, also offers a way for receiving reports sent to you for a charge. Hence you can follow your Experian business credit score here and the setup is effortless. However, if you prefer to not get regular reports (and purchase them), then you can order a single Experian report for your small business on their website.
In addition, if there are any problems or mistakes, you can question any inaccuracies on your small business’s Experian report if you follow the directions on their website. Learn more about assessing your Experian report by checking an example Experian small business credit report.
Often, it is a good idea to hand over a few dollars so as to make sure you obtain your small business credit reports regularly. It’s a lot easier than have to remember to do this and you’ll probably peruse these reports more meticulously, as they come with a price.
Keep on target and make use of the resources these credit reporting companies provide, and make your life less complicated. After all, you’ve already got enough on your plate.
What business credit information would be complete without something about building it?
Corporate credit is credit in a business’s name. It isn’t tied to an owner’s individual credit, not even when the owner is a sole proprietor and the only employee of the corporation. As such, a business owner’s business and individual credit scores can be very different.
Considering that business credit is independent from individual, it helps to secure an entrepreneur’s personal assets, in the event of litigation or business insolvency. Also, with two distinct credit scores, a small business owner can get two different cards from the same merchant. This effectively doubles buying power.
Another advantage is that even new ventures can do this. Going to a bank for a business loan can be a formula for frustration. But building business credit, when done right, is a plan for success.
Personal credit scores depend upon payments but also other components like credit usage percent. But for small business credit, the scores really just depend on if a small business pays its debts in a timely manner.
Establishing company credit is a process, and it does not happen without effort. A company will need to proactively work to build company credit. Nonetheless, it can be accomplished readily and quickly, and it is much more rapid than building personal credit scores. Merchants are a big part of this process.
Undertaking the steps out of sequence will result in repeated rejections. No one can start at the top with business credit. For example, you can’t start with store or cash credit from your bank. If you do you’ll be rejected 100% of the time.
A small business needs to be legitimate to loan providers and vendors. Consequently, a corporation will need a professional-looking web site and email address, with site hosting purchased from a company such as GoDaddy. In addition company telephone and fax numbers must be listed on 411. com. Also the business phone number should be toll-free (800 exchange or the equivalent).
A company will also need a bank account devoted solely to it, and it needs to have every one of the licenses necessary for running. These licenses all must be in the accurate, correct name of the small business, with the same corporate address and phone numbers. Note that this means not just state licenses, but potentially also city licenses.
Visit the IRS web site and get an EIN for the small business– they’re free of charge. Choose a business entity such as corporation, LLC, etc. A business can begin as a sole proprietor but will more than likely wish to switch to a kind of corporation or partnership to lessen risk and make best use of tax benefits.
A business entity will matter when it concerns taxes and liability in the event of a lawsuit. A sole proprietorship means the owner is it when it comes to liability and tax obligations. No one else is responsible.
If you run a business as a sole proprietor at the very least file for DBA (‘doing business as’) status. If you do not, then your personal name is the same as the corporate name. As a result, you can end up being personally accountable for all business debts.
Additionally, per the IRS, using this arrangement there is a 1 in 7 probability of an IRS audit. There is a 1 in 50 probability for incorporated businesses! Prevent confusion and drastically lower the chances of an IRS audit simultaneously.
Begin at the D&B web site and obtain a cost-free DUNS number. A DUNS number is how D&B gets a small business in their system, to generate a PAYDEX score. If there is no DUNS number, then there is no record and no PAYDEX score.
Once in D&B’s system, search Equifax and Experian’s websites for the small business. You can do this at https://www.creditsuite.com/reports/. If there is a record with them, check it for accuracy and completeness. If there are no records with them, go to the next step in the process. By doing this, Experian and Equifax will have activity to report on.
First you must build trade lines that report. This is also referred to as vendor credit. Then you’ll have an established credit profile, and you’ll get a business credit score. And with an established business credit profile and score you can start obtaining revolving store and cash credit.
These varieties of accounts have the tendency to be for the things bought all the time, like coffee, shipping boxes, outdoor work wear, ink and toner, and office furniture.
But first of all, what is trade credit? These trade lines are creditors who will give you initial credit when you have none now. Terms are generally Net 30, instead of revolving. Therefore, if you get an approval for $1,000 in vendor credit and use all of it, you will need to pay that money back in a set term, such as within 30 days on a Net 30 account.
Net 30 accounts have to be paid in full within 30 days. 60 accounts must be paid fully within 60 days. Unlike with revolving accounts, you have a set time when you have to pay back what you borrowed or the credit you used.
To launch your business credit profile the proper way, you should get approval for vendor accounts that report to the business credit reporting bureaus. Once that’s done, you can then make use of the credit, repay what you used, and the account is reported to Dun & Bradstreet, Experian, or Equifax.
Not every vendor can help like true starter credit can. These are merchants that will grant an approval with minimal effort. You also need them to be reporting to one or more of the big three CRAs: Dun & Bradstreet, Equifax, and Experian.
You want 5 – 8 of these to move onto the next step, which is revolving store credit. Also, you may need to apply more than once to these vendors, and you may need to purchase some items you don’t need, to prove you are responsible and will pay on time. Contemplate donating unwanted things to charity.
Uline Shipping Supplies is a true starter vendor. Find them online at https://www.uline.com/. They sell shipping, packing, and industrial supplies, and they report to D&B.
You have to have a DUNS number. They will request 2 references and a bank reference. The initial few orders may need to be prepaid to first get approval for Net 30 terms. You may have to purchase some things you don’t need.
Quill Office Supplies is another true starter vendor. Find them online at https://www.quill.com/. They sell office, packaging, and cleaning supplies, and they report to D&B and Experian.
Because Quill report to two separate credit reporting agencies, you get two credit experiences with them. Place an initial order first unless the D&B score is developed. Normally they’ll put you on a 90 day prepayment schedule. If you order items every month for 3 months, they will normally approve you for a Net 30 Account.
Grainger Industrial Supply is also a true starter vendor. Find them online at https://www.grainger.com/. They sell safety equipment, plumbing supplies, and more, and they report to D&B. You will need to have a business license, EIN, and a DUNS number. For less than $1000 credit limit they will approve almost any person with a business license.
Non-Reporting Trade Accounts can also be helpful. While you do want trade accounts to report to a minimum of one of the CRAs, a trade account which does not report can still be of some value. You can always ask non-reporting accounts for trade references. Additionally credit accounts of any sort should help you to better even out business expenditures, thereby making financial planning less complicated. These are providers like PayPal Credit, T-Mobile, and Best Buy.
Once there are 5– 8 or more vendor trade accounts reporting to at least one of the CRAs, move onto revolving store credit. These are service providers which include Office Depot and Staples. These companies are more likely to have products you need. Use the small business’s EIN on these credit applications.
One good example is Lowe’s. They report to D&B, Equifax and Business Experian. They need to see a DUNS and a PAYDEX score of 78 or more.
Are there 8 – 10 accounts reporting? Then move onto fleet credit. These are service providers such as BP and Conoco. Use this credit to buy, repair, and take care of vehicles. Make certain to apply using the company’s EIN.
One such example is Shell. They report to D&B and Business Experian. They want to see a PAYDEX Score of 78 or higher and a 411 business telephone listing. Also, they might say they want a particular amount of time in business or profits. But if you already have sufficient trade lines, that won’t be needed and you can still get an approval.
Have you been responsibly managing the credit you’ve gotten up to this point? Then move to cash credit. These are companies like Visa and MasterCard. Keep your SSN off these applications; use your EIN instead.
One such example is the Fuelman MasterCard. They report to D&B and Equifax Business. They want to see a PAYDEX Score of 78 or higher; 10 trade lines reporting on your D&B report; and a $10,000 high credit limit reporting on D&B report (other account reporting). In addition they want you to have an established business.
These are businesses such as Walmart and Dell, and also Home Depot, BP, and Racetrac. These are commonly MasterCard credit cards. If you have 14 trade accounts reporting, then these are feasible.
Know what is happening with your credit. Make sure it is being reported and fix any errors ASAP. Get in the habit of taking a look at credit reports and digging into the particulars, and not just the scores.
We can help you monitor business credit at Experian and D&B for only $24/month. See: https://www.creditsuite.com/business-credit-monitoring.
Update the info if there are errors or the data is incomplete.
What’s all this monitoring for? It’s to contest any problems in your records. Errors in your credit report(s) can be taken care of. But the CRAs typically want you to dispute in a particular way.
Get your business’s PAYDEX report at: http://www.dnb.com/about-us/our-data.html. Get your company’s Experian report at: http://www.businesscreditfacts.com/pdp.aspx?pg=SearchForm. And get your Equifax business credit report at: http://www.equifax.com/business/credit-information.
Disputing credit report errors usually means you send a paper letter with copies of any evidence of payment with it. These are documents like receipts and cancelled checks. Never mail the originals. Always send copies and keep the originals.
Disputing credit report errors also means you precisely spell out any charges you dispute. Make your dispute letter as clear as possible. Be specific about the issues with your report. Use certified mail so that you will have proof that you mailed in your dispute.
Always use credit responsibly! Don’t borrow beyond what you can pay back. Keep track of balances and deadlines for payments. Paying off in a timely manner and completely will do more to elevate business credit scores than nearly anything else.
Building corporate credit pays. Excellent business credit scores help a business get loans. Your lender knows the corporation can pay its financial obligations. They know the company is authentic. The business’s EIN attaches to high scores, and lending institutions won’t feel the need to demand a personal guarantee.
Thanks to the recent data breach, there are all the more reasons to check your business and personal credit reports, and be vigilant about any problems you find. Learn more here and get more business credit information.