Build Your Business Credit Score | #The Money Factor Episode 14

Hi, I’m Ian Varley, CEO of Eagle Business Credit, welcome to The Money Factor where we talk about business issues and get your money questions answered. Let’s take that first question.

Everybody thinks about their personal credit score, goes online, checks it, makes sure it looks good, ready for applying for a personal loan. But what about your business credit score? Have you thought about that? It does exist, and you really need to make sure that you are paying your bills on time. There are so many companies out there that will report to credit agencies the length of time it takes for your invoices to be paid. So, if you’re already getting credit from suppliers, the most important thing you can do to maximize your credit score for your business is pay your bills on time. In the same way you’ve got to pay your credit card, you’re going to pay your mortgage on time, it applies to a business, as well. A number of other factors that we’ll talk about, but that’s the most important thing.

 

And, if you haven’t already, go run a Dun & Bradstreet report on yourself, or Equifax or Experian, all the credit agencies that are out there. You can get that information, review it, and look and see if there are any negative things on there that you need to work on. Another thing I would recommend is some major suppliers that you have, you may want to use them as credit reference people for new vendors when you want to establish a credit account. They will ask those people about your payment habits, how quickly you pay, whether there are any issues, what the maximum credit is. Those are people that you want to keep as good partners and good referral sources for your business. So, even if you don’t have much of a credit footprint now, be thinking about it, be building your business credit score with your main suppliers.

That’s an important point. You should register with Dun & Bradstreet, dnb.com. And, if you don’t have an account with them, it’s free to set up. They’ll try and sell you a paid subscription; you don’t necessarily need that. You can go online, you can pull your information, and that’s the same information that a new vendor will have a look at and be able to see. It’s very important to make sure that they have your information correct. If you’ve moved, they may not have your current address. Maybe your phone number’s changed, or you have a new 800 number you need on there. You can call Dun & Bradstreet and give that information to them. You can also give Dun & Bradstreet your information.

If you’re the principal of the company, make sure they have the records correct. Sometimes, if you’ve got a name that could be similar to another business, I’ve seen this, they could have the wrong information. They could have cross pollination of another business. Maybe that information is negative. That actually happened to one of our clients, and we were able to help them get Dun & Bradstreet to clean that up.

So, again, if you don’t know what’s on your credit record, go find it, have a look because, if you’re a vendor that’s about to do business with yourself, go check it out. And, if it’s not right, don’t be afraid to call them up and get that information changed.

So there’s going to be a lot of statutory information out there, as well, that’s available; it’s public record. It’s at the state level, and it can be at the federal level. It really depends what it is. If you’ve had a legal action ever against your business, that information will be out there. Whether it’s settled or still in play now, that information is available; it’s public record. The same goes for liens on your business. If you’ve fallen behind with your taxes, maybe there’s a state tax lien that’s filed. Or maybe it’s a federal tax lien for unpaid taxes. That information is going to be out there for public record.

 

The same goes for UCCs. If anybody has ever lent your business some money and filed a collateral statement, then that UCC filing, whether it’s active or not, is a part of the record on your business. So, the most damaging forms of public information are obviously going to be liens, tax liens, and probably legal actions, as well, although they may not necessarily be a bad thing. You really have to look at it if you want to build your business credit score.

 

UCCs, a lot of businesses nowadays can have several filed. So, people won’t necessarily look at it as a bad thing but, if you’ve got a new lender that’s coming in, they’re going to need to go through that list of UCC filings to see what collateral is currently pledged. So, again, a lot of state information, a lot of federal information. Not all of it’s bad, but you should be aware of what’s there.

We talk to a lot of businesses, and sometimes they find that they don’t even know that a UCC has been filed because they filled out an application online and, before they know it, they’ve given their authority for a potential lender, one that maybe never even gave them any money, or they didn’t sign up with, and that lender has gone in and filed a UCC, and it’s remained on the business. Well, they are going to have to terminate it but, if you don’t know it’s there because you’re not checking the records, then you need to contact them.

 

A lot of the states at the secretary of state level have an online presence. You can go in, you can search on your own business and see what records are there. Check it out, make sure that you know what information is out there on your business because other people are looking, certainly when you’re applying for loans. This information could impact your ability to build your business credit score.

Well, that’s all the questions we have for today. Thank you so much for sending them in. You can find us online at #themoneyfactor. Please go in, send your questions. We’d love to answer them on the next episode of The Money Factor.