Published By Janet Gershen-Siegel at July 18th, 2022
If you’ve been diligently building your business credit, but not seeing results, damaged business credit may be to blame. But don’t worry—business credit repair is very possible although you will need to be patient with the process.
Do you know how to perform business credit repair? Knowing how to repair your damaged business credit is vital for you, the business owner. Many think they have certain accounts reporting on their business credit reports, when in fact they really aren’t reporting.
In fact, only 7% of trade vendors report positive payment experiences to any business credit bureau. So chances are good that the negative information you think is on your report might not even be there. But you should still know how to repair your damaged business credit.
To know what’s on your business credit, you should get business credit reports from the main business credit reporting agencies.
Business Credit reports are offered by:
You will first want to get a copy of your business credit reports to see what is being reported. So saving damaged business credit starts here.
You might have already heard of the FCRA. The Fair Credit Reporting Act outlines consumer’s rights to dispute inaccurate information on their credit reports. But it’s essential to know that this law does NOT apply to business credit repair.
There are currently no laws which outline business owner’s rights regarding credit disputing. The FCRA also requires credit issuers to tell you which bureaus they pulled your credit data from. This was to determine your denial for financing.
But in the business credit world this is not the case. You rarely ever know the source pulling your business credit or which credit bureau they pulled it with.
If you see accounts or details you don’t recognize or you feel are inaccurate, here’s what to do. You can ask for a debt validation for that account using a debt validation letter.
A debt validation is where you solicit the creditor for verification of the account details they are reporting. They will typically send you back details of your account that they are reporting.
But remember: the FCRA and the fair debt collections practices act apply to consumer debts, not business debts. So you can send a debt validation letter. But the law does not require the creditor to respond to your dispute.
When sending a debt validation request, you must send your request to the creditor in writing. Also make sure you dispute the debt with the credit reporting agencies if the creditor doesn’t respond to your request.
If no response is received within 30 days of mailing the letter directly to the creditor, then you should then dispute the account with the business credit reporting agencies.
Know what is happening with your credit. Make sure it is being reported and attend to any inaccuracies as soon as possible. Get in the practice of checking credit reports. Dig into the details, not just the scores, and make the most out of your credit monitoring.
Update the relevant information if there are mistakes or the details are incomplete. At D&B, you can do this at: https://www.dnb.com/duns-number.html. For Experian, go here: www.experian.com/small-business/business-credit-information. So for Equifax, go here: www.equifax.com/business/small-business.
To dispute a debt with the business credit reporting agencies, first contact customer service with any of the three reporting agencies for billing disputes, challenging payments and outdated public filings that appear on your report.
When you dispute an item the business reporting agencies will have vendors re-verify payments and remove charges if the vendor cannot verify the information. A credit repair service might also be good for this.
The business credit reporting agencies can also help to clear up issues that have been settled or dismissed, yet still appear in your report. They may ask you to send in documentation to verify a settlement or dismissal.
The business credit reporting agency will then recheck the status of the public filing if you do not have documentation. If you are working with companies which know how to repair damaged credit, they should have experience with these kinds of requests.
So, what’s all this monitoring for? It’s to dispute any problems in your records. Mistakes in your credit report(s) can be fixed.
Disputing credit report errors means you specifically detail any charges you dispute.
Dispute your or your small business’s Equifax report and file a dispute letter by following the instructions here: www.equifax.com/small-business-faqs/#Dispute-FAQs.
You can dispute inaccuracies on your or your small business’s Experian report by following the directions here: www.experian.com/small-business/business-credit-information.
And D&B’s PAYDEX Customer Service telephone number is here: www.dandb.com/glossary/paydex. D&B still wants you to dispute by phone.
Dun and Bradstreet provides US based small businesses and non-publicly traded companies convenient access to D&B’s information on their business. Registered users can view, print, and submit updates to their D&B Business Information Report.
So many business owners don’t know that credit monitoring services for Dun and Bradstreet reports actually come to you from a private company known as D&B Credibility.
Equifax Business also has an online system for credit disputing. They provide this through their online credit monitoring platform in their member center under Disputes. Keep in mind, the business credit reporting agencies may not be allowed to release the name of the person making the negative reference on your report.
Always keep in mind, you do not have the same rights as you do with consumer credit reporting as there is no FCRA. However, you can contact customer service to discuss the item on your report as well as your options.
Contact the Creditor to Help Repair Your Damaged Business Credit
If your debt validation and investigation don’t net you the deletion of the derogatory item, move to the next step. Now you need to contact the creditor.
Find out from them what you must do to have the item removed from the business credit report. Usually, they will remove the account if you pay the outstanding debt.
There is one main reason for a derogatory item to be on your business credit report. So it is usually because the creditor feels there is an outstanding balance that you owe them.
Therefore, they will typically remove the account if you pay the outstanding debt. If you reach an agreement for deletion, get the agreement in writing. And ensure they provide you a time frame of when they will correct the damage on your report.
Late payments can be another reason your credit takes a hit. This is a particular problem with credit card debt, as you can end up paying far more via credit card, due to interest charges.
With every credit card, the best course of action is to watch your spending. That will help keep a debt collector from knocking on your door.
A quick check online reveals there are several credit repair companies. But it takes some doing to find a credit repair company devoted to business. A credit repair company may say they provide credit repair services for both consumer and business clients.
Hence, you will need to dig deeper to determine if a credit repair organization actually provides the credit repair services you need.
Because if they are just a consumer credit counseling service, they might not be able to provide all the credit repair services you need.
Before you decide to work with a credit repair business, be aware that credit repair companies are governed by the Credit Repair Organizations Act (sometimes called the Credit Repair Organization Act).
Pursuant to this federal law, the credit repair industry is not allowed to demand payment in advance. The law also says that you’re allowed to dispute inaccurate information.
But no one “has the right to have accurate, current, and verifiable information removed from your credit report.”
Hence credit repair companies which promise the removal of correct information—even if it’s negative—are just a credit repair scam.
While the CROA does not require it, many credit repair companies are required to have a surety bond by the laws of the state where they do business.
A surety bond is a three-party agreement that legally binds a credit repair business (which needs the bond), the state (which requires the bond) and a surety company selling the bond. If credit repair companies fail to perform or cause consumers harm, this kind of bond will cover resulting damages or losses.
As with most other industries, you can rate or even dispute with credit repair companies via the Better Business Bureau. But note that one of the better-known credit repair companies, Pyramid Credit Repair, did not seem to have a listing with BBB.
Start with vendor credit. It’s a great method to repair bad credit fast—by adding positives to help overshadow the negatives.
First you should build tradelines that report. This is also called vendor credit. Then you 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 to get retail and cash credit.
These sorts of accounts have the tendency to be for the things bought all the time. For example marketing materials, ink and toner, and office furniture.
But what is trade credit? These trade lines are credit issuers who give you initial credit when you have none now. Terms are ordinarily Net 30, instead of revolving.
So, if you get approval for $1,000 in vendor credit and use all of it, you need to pay that money back in a set term. For example, within 30 days on a Net 30 account.
To launch your business credit profile properly, get approval for vendor accounts that report to the business CRAs. When that’s done, you can then use the credit.
Then repay what you made use of. And the account is on report to Dun & Bradstreet, Experian, or Equifax. This is how to build credit fast.
These vendors can help you build business credit in 30 days!
You want 3 of these to move onto the next step. Check out some stellar starter vendor choices from us.
Non-Reporting Trade Accounts can also be helpful. You want trade accounts to report to at least one CRA. But a trade account which does not report can also be of some worth.
You can always ask non-reporting accounts for trade references. In addition, credit accounts of any sort should help you to better even out business expenses. This makes financial planning easier. These are companies like PayPal Credit, T-Mobile, and Best Buy.
You may be asking: what is a good way to repair your credit? By building more and more positive payment experiences, you get a terrific way to repair damaged credit history. Your bad credit will be replaced by better credit.
Business Credit Scoring
Business credit scoring is based on how you pay your bills. If you pay the majority of reported accounts on time or early, you will have a good score.
But most business owners have little to no credit reporting. So even one negative account can have a BIG impact on their business credit score.
The key thing to remember when thinking about how to repair business credit is it essential that you continuously build your business credit profile just as you do your consumer credit.
One of the best ways to battle negative information on your report is easy. You need to offset bad credit with LOTS of positive information. So continue building credit for your business just as you do with your personal credit.
If you want to consider working with credit repair companies, do your research. Make sure you don’t get involved with less than savory credit repair companies.
For more information, check out this fantastic post from Straight North. It’s all about Do’s and Don’ts for your business credit score.
Check out all of the necessary details. And find out how we can help you build business credit.