Published By Janet Gershen-Siegel at February 14, 2018
Find Out Your Business Credit Rating
Do you know how to find out your business credit rating? Do you know the way to effortlessly request and go over your company credit reports?
Your best bet as a small business owner is to stay on top of your company credit reports. They come from PAYDEX, Equifax, and Experian. There are three big credit reporting bureaus for businesses. And you absolutely need to evaluate all three of them on a regular basis.
This is because they use slightly different benchmarks consequently moving the needle for one can move the needle for the two others, although maybe not as much.
Do not allow your business credit scores slide. You should pounce on any mistakes quickly as you can. Catch anything pulling your scores down and take corrective steps. Get your reports easily and stay right on top of all three scores by following a few easy steps.
Dun & Bradstreet‘s PAYDEX score of your business can wind up being one of the principal reasons that your small business receives credit in any way. D & B offers Credit Signal, which is a means to track your credit score by having the reports come straight to you, for a fee.
You may find the fee is well worth it. You can avoid troubles from letting this score slip. And you won’t have to handle the reminders you might need to stay up to date.
Don’t want to use Credit Signal? No worry, as you can acquire your PAYDEX report by way of D & B and, if necessary, you can get in touch with 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 specimen report as well as some higher level support in how you can interpret it.
Equifax offers a risk monitoring service. It is more convenient as it lets reports come straight to you. If you do not wish to purchase continuing reports, you can instead request your business’s Equifax report.
If you have to question small business’s Equifax report, do so by following directions on their web site. Learn how to examine your Equifax report by browsing through an example of their reports.
Experian, one more big credit reporting company, also offers a method for receiving reports sent to you for a charge. As a result you can keep track of your Experian company credit score and the setup is easy.
If you prefer to not get regular reports (and purchase them), then you can order a single Experian report on their site.
If there are any troubles or mistakes, you can contest any mistakes on your business’s Experian report if you follow instructions on their site. Learn about evaluating your Experian report by assessing an example Experian business credit report.
Want to improve your business credit rating? Then you want to establish business credit!
Small business credit is credit in a small business’s name. It doesn’t tie to an owner’s consumer credit, not even when the owner is a sole proprietor and the solitary employee of the company. Consequently, a business owner’s business and consumer credit scores can be very different.
Given that corporate credit is independent from personal, it helps to protect a business owner’s personal assets, in the event of a lawsuit or business bankruptcy. Also, with two distinct credit scores, a small business owner can get two different cards from the same vendor. This effectively doubles buying power.
Another advantage is that even startup ventures can do this. Going to a bank for a business loan can be a formula for frustration. But building corporate credit, when done properly, is a plan for success.
Consumer credit ratings are dependent on payments but also other elements like credit use percentages. But for company credit, the scores truly just depend on whether a company pays its bills on time.
Establishing company credit is a process, and it does not happen without effort. A company has to proactively work to build small business credit. That being said, it can be done easily and quickly, and it is much swifter than establishing individual credit ratings. Merchants are a big component of this process.
Performing the steps out of sequence will result in repetitive denials. No one can start at the top with small business credit. For instance, you can’t start with store or cash credit from your bank. If you do you’ll get a denial 100% of the time.
A small business must be reliable to credit issuers and merchants. For this reason, a company will need a professional-looking website and e-mail address, with site hosting bought from a vendor like GoDaddy. Also company telephone and fax numbers ought to have a listing on 411.com.
In addition the business phone number should be toll-free (800 exchange or similar).
A small business will also need a bank account dedicated strictly to it, and it must have every one of the licenses necessary for operation. These licenses all have to be in the accurate, correct name of the company, with the same business address and telephone numbers. Note that this means not just state licenses, but possibly also city licenses.
Visit the IRS website and acquire an EIN for the small business. They’re free. Choose a business entity like corporation, LLC, etc. A company can start off as a sole proprietor but will probably wish to switch to a variety of corporation or partnership to minimize risk and optimize tax benefits.
A business entity will matter when it concerns taxes and liability in case 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 are a sole proprietor, then at the very least be sure to file for a DBA. If you do not, then your personal name is the same as the small business name. As a result, you can find yourself being directly responsible for all small business debts.
And also, per the IRS, using this arrangement there is a 1 in 7 chance of an IRS audit. There is a 1 in 50 probability for corporations! Avoid confusion and noticeably decrease the chances of an Internal Revenue Service audit simultaneously.
Start at the D&B web site and obtain a totally free DUNS number. A DUNS number is how D&B gets a small business in their system, to produce 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 corporation. 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. In this manner, Experian and Equifax will have activity to report on.
First you must build trade lines that report. This is also called vendor accounts. Then you’ll have an established credit profile, and you’ll get a business credit rating.
And with an established business credit profile and rating you can begin getting revolving store and cash credit.
These sorts of accounts often tend 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 credit issuers who will give you initial credit when you have none now. Terms are oftentimes Net 30, rather than revolving.
Therefore, if you get an approval for $1,000 in vendor credit and use all of it, you must pay that money back in a set term, such as within 30 days on a Net 30 account.
Net 30 accounts must be paid in full within 30 days. 60 accounts have to be paid fully within 60 days. Unlike with revolving accounts, you have a set time when you must pay back what you borrowed or the credit you made use of.
To kick off your business credit profile the proper way, you should get approval for vendor accounts that report to the business credit reporting agencies. Once that’s done, you can then make use of the credit.
Then pay back what you used, and the account is on report to Dun & Bradstreet, Experian, or Equifax.
Not every vendor can help like true starter credit can. These are vendors that will grant an approval with marginal 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 to 8 of these to move onto the next step, which is revolving store credit. But you may need to apply more than one time to these vendors, and you may need to buy some things you don’t need to have, to demonstrate you are responsible and will pay on time. Consider giving unwanted items to charity.
Non-Reporting Trade Accounts can also be helpful. While you do want trade accounts to report to at least one of the CRAs, a trade account which does not report can nonetheless be of some value. You can always ask non-reporting accounts for trade references.
And credit accounts of any sort ought to help you to better even out business expenses, therefore making budgeting less complicated. These are companies like PayPal Credit, T-Mobile, and Best Buy.
Once there are 5 to 8 or more vendor trade accounts reporting to at least one of the CRAs, progress to revolving store credit. These are companies such as Office Depot and Staples. These companies are likelier to have products you need.
Use the 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 to 10 accounts reporting? Then move onto fleet credit. These are service providers like BP and Conoco. Use this credit to purchase, fix, and maintain vehicles. Make sure to apply using the small business’s EIN.
Have you been responsibly handling the credit you’ve up to this point? Then progress to cash credit. These are service providers like Visa and MasterCard. Keep your SSN off these applications; use your EIN instead.
These are companies 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 doable.
Find out your business credit rating. Make certain it is being reported and address any mistakes as soon as possible. Get in the habit of checking 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 90% less than it would cost you at the CRAs. See: https://www.creditsuite.com/business-credit-monitoring. Update the data if there are mistakes or the info is incomplete.
So, what’s all this monitoring for? It’s to challenge any inaccuracies in your records. Mistakes in your credit report(s) can be fixed. But the CRAs often want you to dispute in a particular way.
Disputing credit report inaccuracies typically means you mail a paper letter with duplicates of any proof of payment with it. These are documents like receipts and cancelled checks. Never mail the original copies. Always mail copies and retain the original copies.
Disputing credit report mistakes also means you specifically spell out any charges you challenge. Make your dispute letter as crystal 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 more than what you can pay back. Keep an eye on balances and deadlines for payments. Paying in a timely manner and completely will do more to increase business credit scores than nearly anything else.
Building company credit pays. Good business credit scores help a business get loans. Your credit issuer knows the corporation can pay its financial obligations. They understand the small business is for real.
The corporation’s EIN links to high scores, and loan providers won’t feel the need to require a personal guarantee.
Business credit is an asset which can help your company in years to come.
Often, it’s worth it to pay so you get your business credit reports regularly. It’s a lot more convenient than have to remember to do this. And you’ll probably check out these reports more thoroughly, as they come at a cost.
Stay on track and use the resources these credit reporting firms supply, and make your life less complicated. After all; you’ve already got enough on your plate.
Thanks to the recent data breach, there are even more reasons to check your company and individual credit reports. And be vigilant about any errors you spot. Learn more here and get started in how to find out your business credit rating.