Why You Should Check Business Credit Scores
Most business owners understand the importance of maintaining a good business credit score. Having a credit history that is less than perfect, can be problematic because operating a business often requires working with vendors and partnering with other entities, and many will be hesitant to work with you if you have bad credit.
When one member of a partnership fails to deliver on its commitments, there are delays and those delays cost money and can result in customer dissatisfaction. Knowing the risk profile of a company helps business owners assess the potential risk before deciding to do business with the entity.
Business owners can determine the following through the use of online business credit reports:
A business credit report that provides a clear picture of a business's financial situation allows prospective partners to be sure they are working with a reputable and creditworthy company.
Companies rely on Equifax, Experian, and Dun & Bradstreet Business Credit Reports to provide the following information:
Risk assessment - Access a company’s credit score and credit rating to evaluate payment behavior, risk level, and business sustainability.
Overall picture - 360-degree overview of the entire business - corporate family trees, legal events, trade payment data, third party web information, etc.
Investigate – If a credit bureau is unable to locate a company’s financial data in its database, it can request an investigation.
This information helps companies make confident decisions on who to do business with and also helps financial companies determine whether a business can make regular payments. It can also influence Interest rates that are offered on loans, repayment terms, and how much money a company can borrow.
How to maintain a healthy business credit score
By checking a potential vendor or partners’ credit report, a business can protect itself from unnecessary business risks and financial problems.
When one member of a partnership fails to deliver on its commitments, there are delays and those delays cost money and can result in customer dissatisfaction. Knowing the risk profile of a company helps business owners assess the potential risk before deciding to do business with the entity.
Business owners can determine the following through the use of online business credit reports:
- Is the prospective client or supplier a valid business entity?
- Does the company pay its bills on time?
- Are there any liens or judgments on file for the company?
- Is the company financially stable?
A business credit report that provides a clear picture of a business's financial situation allows prospective partners to be sure they are working with a reputable and creditworthy company.
Companies rely on Equifax, Experian, and Dun & Bradstreet Business Credit Reports to provide the following information:
Risk assessment - Access a company’s credit score and credit rating to evaluate payment behavior, risk level, and business sustainability.
Overall picture - 360-degree overview of the entire business - corporate family trees, legal events, trade payment data, third party web information, etc.
Investigate – If a credit bureau is unable to locate a company’s financial data in its database, it can request an investigation.
This information helps companies make confident decisions on who to do business with and also helps financial companies determine whether a business can make regular payments. It can also influence Interest rates that are offered on loans, repayment terms, and how much money a company can borrow.
How to maintain a healthy business credit score
- Ensure that credit balances are low
- Try not to cancel old credit accounts
- Manage debt responsibly
- Monitor accounts for red flags
- Maintain a healthy payment history
- Make good credit decisions
By checking a potential vendor or partners’ credit report, a business can protect itself from unnecessary business risks and financial problems.
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