Fact Sheet: Your Business Credit File

rsz_computerwithphone by Tim Parker on January 10, 2013
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If you’ve ever taken out a loan or a credit card on behalf of your small business, your company probably has a credit history similar to that of an individual borrower. And, just like in your personal life, a lot is riding on making sure that your business’s credit file looks good and that its credit score is high.

Here are some questions — and answers — about business credit files.

Why should I closely monitor my business credit file?

According to the SBA, there are four reasons:

  1. The higher your business credit score, the more likely you are to get a loan with favorable terms.
  2. Vendors may offer you better payment terms: Instead of giving you 15 days to pay, they may give you 30 or more.
  3. If you sell to others, you can check their credit files. If you know how to evaluate your own, you will know how to evaluate theirs.
  4. You can protect your business from identity theft and the negative effects of inaccurate information.

Is there a company that maintains my business credit file?

Yes. Although companies like Experian and Equifax keep credit files on businesses, the most widely used commercial service is Dun & Bradstreet. If you own a new business, it probably doesn’t yet have a D&B file. However, if you run an established company with a small-business credit card, a bank loan, or anything else related to credit activity, it likely has a file.

How do I find out whether I have a business credit file?

Go to D&B’s website and do a search for your business. If you have a business credit file, it will appear in the results. If you do not, you should register for a D-U-N-S Number.

What is a D-U-N-S Number, and why do I need one?

D-U-N-S stands for “Data Universal Numbering System.” Once you have a D-U-N-S Number, you have a credit file with D&B.

According to D&B’s website, government, organizations, financial institutions, and trade associations may require you to get a D-U-N-S Number before doing business with them. You can apply for free (or pay a fee for an expedited number).

Does my business D&B credit file work just like my credit report?

No. When it comes to your personal credit file, you have very little say about its contents: You can file disputes and have inaccurate information removed, but that’s about it. Your commercial credit file is different: You can not only dispute inaccurate information, but also submit information to be included in your file. (D&B will verify this information before adding it.) To do this, join the D&B Credit Builder program.

What’s a Paydex score?

Paydex is your business’s credit score from D&B. It ranks your company on a scale of zero to 100, which essentially rates your “credit worthiness”: Zero to 49 indicates a high risk for late payment, 50 to 79 indicates a moderate risk, and 80 to 100 indicates a low risk.

How do I raise my Paydex score?

Pay your bills on time. Keep your business activities separate from your personal charges, and use a small-business credit card to pay for routine business-related purchases. If you pay for something business-related with your personal card, you will not receive D&B credit.

Do business with larger vendors that likely report to D&B. If you want to know whether a business reports to D&B, speak to its credit department (if it has one).

rsz_computerwithphone

Tim Parker is a business writer for Intuit and is passionate about solving small business problems.

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