Good business credit is vital for obtaining low-cost funding to help your company develop. Meanwhile, bad credit might prevent you from acquiring a loan or a credit card, leasing or purchasing space or equipment, or cooperating with other firms.
If your company’s credit isn’t in good shape, corporate credit restoration is a viable option – but keep in mind that it requires time and proper maintenance. Although you can repair your credit on your own, working with a financial consultant can help keep you on track.
What Exactly Is Business Credit?
A record of your company’s debt payments, such as those to suppliers and lenders, is known as business credit. Notably, if you formed your company as a sole proprietorship, you may not have a business credit file; instead, your firm’s credit would be tied to your personal credit, which would also need to be repaired.
Obtaining a copy of your business credit report is the easiest approach to determine if your company has a low credit score. If one isn’t accessible, it might be because you need to register for a DUNS number, which is a digital identity that allows individuals to learn about your company’s credit history. Any firm, even sole proprietorships, can apply for a DUNS number.
How to Repair Business Credit in 7 Simple Steps
You may restore your company credit by following these steps.
STEP 1: Obtain Copies Of Your Company’s Credit Report
It’s a good idea to get a report from each of the three agencies that monitor company credit:
- Experian: A basic company credit report costs $39.95, while an advanced report costs $49.95.
- Equifax: A single Equifax business report costs $99.95, or a pack of five reports costs $399.95.
- Dun & Bradstreet: For $64.99, you can obtain a single Credit Evaluator Plus report, or for $139.99, you can get a report with a bit more information, the Business Information Report Snapshot.
REPORTS ON PERSONAL CREDIT
Even if you already have a company credit file, it’s a good idea to get personal credit reports to see if there are any adjustments you can make there as well – some lenders will want both. Personal credit reports are provided by three companies: Experian, Equifax, and TransUnion. AnnualCreditReport.com provides a free report from each agency once a year (currently, all three agencies offer free weekly reports through April 2021).
STEP 2: Determine And Disputative Errors
You may discover an inaccuracy in your company’s credit report. Make sure to thoroughly examine the reports, as they will all be unique. Each credit reporting organization has its own reporting mechanism for such errors:
Experian: To submit needed adjustments to your business credit report, go to BusinessCreditFacts.com/update. If you have any queries, you can contact Experian Commercial Relations at BusinessDisputes@experian.com or 888-211-0728.
Equifax: Log in to your Equifax Member Center account and contact Equifax using one of the alternatives indicated there. In order to register for an account, you must first purchase an Equifax report. Equifax will send you a Research Request Form.
Dun & Bradstreet: Use the free DUNS Manager service to submit updates to business information.
STEP 3: Negotiate With Creditors
If your company is in debt, contact your creditors to see if you can work out a settlement or payment plan. Because your creditors do not want you to go out of business or declare bankruptcy, they will most likely request a portion of your debt or require you to pay on a long-term plan.
A payment plan in place may improve some business ratings and scores – for example, Dun & Bradstreet generates a Delinquency Predictor Score, which indicates how successfully a company pays its obligations.
STEP 4: Pay Off Your Debt
Reduce your expenses so that you can pay them off. It’s acceptable to have some debt, but don’t allow it to get out of hand. Consider debt consolidation since making a single payment each month might help you organize your debt repayment approach. Paying off your debt helps keep your credit usage rate low, which lenders will check when evaluating your company for a loan. It’s a good idea to limit your credit consumption to around 30% of your available credit, but this isn’t a hard and fast rule.
STEP 5: Request That Creditors Report Favorable Activity
Request that your vendors and suppliers record your interactions with them to the business credit agencies. Larger corporations and government entities are more likely to report than smaller firms.
“It’s comparable to purchasing a personal automobile,” said Ken Alozie, a mentor with SCORE, an organization that helps small companies. “If you buy a car from a large Toyota dealership, they will report to Equifax or Experian, but tiny local dealerships may not.”
Once you’ve confirmed that your vendors and suppliers will report, be sure you pay them in full and on time, if possible. Your company credit report may include payment trends.
STEP 6: Upload Your Financial Reports To Dun & Bradstreet
To be proactive, use the DUNS Manager tool to upload your company’s financial records to your business credit file with Dun & Bradstreet. You can also send financial statements to D&B via mail:
3501 Corporate Parkway Center Valley, PA 18034 D&B Statement Update Team
When generating scores and ratings, the agency considers this information. Companies that look up your financial statements will be able to see these filings as well, giving them confidence that financing to you or doing business with you is a secure investment.
STEP 7: Seek Help To Repair Business Credit
There are several strategies for business owners to enhance their credit on their own. However, some people may feel overwhelmed or have particular questions regarding their situation.
A small company financial counselor can assist you in managing your debt and improving your credit in such circumstances. These professionals may assist you in negotiating settlements or advising you on the best method to consolidate company debt.
Where Can I Find Credit Repair Services?
Along with seeking advice from financial consultants, you may also engage with firms that assist in repairing corporate credit.
There are several possibilities available. Therefore it is critical to research them thoroughly. Look for businesses specializing in corporate credit repair rather than personal credit restoration. They will provide a free first consultation, have a proven track record and strong references, and notify you of your legal right to repair your credit yourself. Avoid those that seek upfront cash, refuse to sign a contract, give guarantees, or promise speedy cures. The National Foundation for Credit Counseling, a nonprofit group also aids small company owners by offering an online financial assessment tool and one-on-one counseling.
Tips for Keeping Your Business Credit in Good Standing
Once you’ve fixed your company credit, it’s critical to maintain that excellent score – here are a few things you can do to help.
Enroll In Credit Monitoring.
Sign up for a service that will keep an eye on your credit reports and notify you if anything changes. Credit bureaus charge monthly or yearly fees for such services. For a monthly cost of $149.00 or $199.00, Dun & Bradstreet provides CreditBuilder Plus or CreditBuilding Premium, which helps you develop and monitor your credit. Experian charges $189.00 per year for Business Credit Advantage, including daily monitoring.
Regularly Review Your Reports.
Even if you have professional credit monitoring in place, it’s a good idea to check your reports regularly to ensure that everything is in order. Check to see if any problems are getting past your monitor’s filters.
Maintain a Total Business Credit Consumption of Less Than 30%.
The quantity of credit you presently have available is a significant metric for potential lenders. While it is a good idea to limit your credit utilization below 30% of your available credit, lenders will make judgments based on your whole financial picture, including all of your income and spending, as well as your personal credit rating.
Other firms will be more inclined to lend you money, sign into a lease or contract with you, or partner with you in a commercial partnership if you have good business credit. If you are looking for more information on a small business loan, visit Simply Business Loan.
