One
of the biggest challenges for startups and small businesses is that
many have blank credit files.While it may be true that there's nothing
negative in there, there very well may be nothing positive, either. It's
just blank -- and that's a problem because an empty credit file is just
as bad as having a bad credit file, according Erik Simon, director of
marketing and communications for Dun & Bradstreet Credibility Corp,
a business-credit monitoring service provider. "A blank credit file is
to a bank like a blank resume would be to an employer," he says. The reason is so many different entities -- from lenders to insurance
companies to vendors - use that business-credit information to make
decisions that can make or break a startup or even an established
company. Just like your personal credit, a good credit rating can open
the door for a business to borrow money, secure credit, get better
payment terms or even obtain a contract.
So how do you go about establishing business credit? Simply pay your
bills on time and start documenting examples of good payment history.
That way, you'll help your company boost its business credit scores. While that sounds easy enough, not every credit bureau will let you
self-report your good payment history. Dun & Bradstreet Credibility
Corp offers one of the only products on the market that enables a
startup- or small-business owner to proactively build and manage a
commercial credit file, which in turn impacts a company's popular and
oft-cited D&B Business Credit Score.
Related: How to Check a Customer's Credit Worthiness
By contrast, Experian does not allow companies to establish their own
credit profile. Instead, the credit bureau uses third-party verified
and contributed information, according to Adam Fingersh, senior vice
president of marketing and product management at Experian. He adds that
the reason for using third-party data is to "maintain impartiality."
Related: Five Ways to Build Business Credit
Equifax does allow self-reporting but its minimum
requirements for doing so are quite lofty and likely out of reach for
most startups and entrepreneurial efforts. For example, Equifax requires
that companies within the financial services industry have a minimum of
500 business vendors to report to on a monthly basis. Companies within
other industries (non-financial services) must have a minimum of 2,000
vendors to report on a monthly basis.
How have you benefited from keeping track of your business credit score? Let us know in the comments section.
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