With little information at their disposal, companies are left with minimal transparency surrounding business credit scores/indexes and how it impacts their success and growth. Depending on preference one or all of your business business credit reports and scores/indexes will be used when you apply for a loan, line of credit, lease, commercial insurance, or when looking to establish a new partnership/account. Also due to the unregulated nature of business credit, any person or establishment can purchase a copy of your reports without the owners knowledge or consent.
Commercial Insurance & Business Credit
As with personal auto or homeowner insurance, businesses can receive much higher or lower pricing/premiums on commercial insurance based on the state of their business credit scores and indexes.
Some of the most common types of commercial insurance are – property, liability, and workers’ compensation. Every business owner, small or large, will likely need one or more types of insurance in order to protect their assets from law suits and in the case that an individual gets injured or an accident happens. Insurance policies differ depending on need and risk. For example: Some need insurance if they have equipment being delivered to cover drivers and the shipment, others need insurance to cover lawsuits from a hack.
How insurance agencies use business credit
Commercial insurance agencies use business credit profile(s)/score(s) to determine insurance premiums based on the risk of your company filling a claim. If your business credit is in a weak credit standing you may end up paying much higher premiums or even be denied entirely by your preferred provider because you will be considered a higher risk. As with loans, it’s not as simple as evaluating whether you can afford to pay for the coverage; insurance agencies look at your billing and payment patterns, outstanding loans and some business credit reports show the number credit card accounts and the balances, along with any collection accounts, credit history, and relevant industry data.
Before you even begin shopping for commercial insurance, you should request a copy of your business credit profiles, scores, and indexes. Check each report for accuracy. Even small data errors and mismatched information can affect your credit score including, but not limited to, public filings, general business information, and business type.
If you’re a relatively new business and you do not yet have a business credit profile(s) you must begin the process of building business credit by establishing yourself as a legal entity, building vendor relationships, and opening a small line of credit, check out our Building Business Credit page for more information.
If you have any questions or notice issues on your report due to delinquencies, collections, judgments, liens or inconsistencies / errors on your report(s), reach out for a complimentary credit review with one of our FICO Certified business credit experts. We also would be happy to review your personal credit as well as your business credit. We will need to see a current copy of all three reports whether you need business or personal credit repair so that we can properly advise you on how North Shore Advisory, Inc. can help your business.