A great business credit profile can bring great opportunities for a growing company.
Unfortunately, many owners overlook or don’t understand how to properly establish and build business credit scores. We have also found that even established companies with detailed credit profiles, are not checking their reports on a regular basis. Damaging (even if incorrect) information lingering on business credit reports can cause significant damage to scores.
Here are just some of the reasons why a healthy business credit profile is vital for a business:
Access to Business Financing
When business credit ratings are excellent, lenders and suppliers will give favorable terms to purchase on credit. Without a business credit rating or the right business credit rating, a supplier may require cash on delivery or ask for a personal guarantee. This could cause longer waits for merchandise and less cash flow. Lenders look at business credit and, in some cases, they review personal and business credit. If you are looking for a small business loan most lenders review the FICO SBSS Credit Score.
Landing Supplier Contracts
If your company wants to do business with government agencies or Fortune 500 companies, there is an extremely high chance they will review your business credit reports. These types of accounts normally look at the DNB Supplier Evaluation Rating (SER).
Keeping Business Credit Separate from Personal Credit
Maintaining a business credit report enables a complete separation between the personal credit reports of the business owner to the commercial credit reports established by the company itself.
With favorable business credit ratings, a business can obtain financing from many companies willing to grant credit without a personal credit check or guarantor. This allows a business to acquire products and services it needs on credit without putting the business owner’s personal credit at risk.
Business credit reports are frequently being pulled by potential business partners so they can find out about a company’s credit history and decide if the business is capable of being a sound business partner. Unlike personal credit reports, business credit reports are available to the public and can be purchased without the consent or knowledge of the firm’s info that is being viewed. This means any viewer of a business credit profile can be making decisions about the company that could benefit or compromise its future success.
When our clients are bidding for a particular job, they have us print out their competitors’ credit report for them. If their competitors’ credit isn’t sound, then not only will they send in the bid with more confidence, but they’ll also attach a copy of their excellent business credit reports/scores and indexes. This could alert the company/partner to check all competitors’ reports, which can boost our clients’ chances even further.