How to Rock your Business Bank Credit Score in a Recession

Rock Your Business Bank Credit Score in a Recession

What’s your business bank credit score in a recession?

Before going any further, do you know the difference between bank credit and business credit? Business credit is the full and complete amount of money that your small business can get from all manner of creditors. That means the credit unions, credit card companies, and leasing companies. And it means any credit your small business can get from suppliers, under what is called trade credit or vendor credit or trade lines. Your bank credit score, though, is a touch different.

Bank credit, on the other hand, is the full amount of borrowing capacity which a small business can get from the banking system only. Hence your bank credit score, of course, is the measurement of this capacity to borrow.

Your Business Bank Credit Score in a Recession, Explained

A small business can get more business credit rapidly, so long as it has at least one bank reference and an average daily account balance of at least $10,000 for the most recent three month time period. This set up will yield a bank rating of a Low-5. So this means it is an Adjusted Debt Balance of from $5,000 to $30,000.

A lower rating, like a High-4, or balance of $7,000 to $9,999 will not automatically reject the small business’s loan application. However, it will slow down the approval process.

Your Business Bank Credit Score in a Recession, Defined

A bank credit rating is the average minimum balance as maintained in a business bank account over a three month long period. Hence a $10,000 balance will rate as a Low-5, a $5,000 balance will rate as a Mid-4, and a $999 balance will rate as a High-3, etc.

Goals for Your Business Bank Credit Score in a Recession

A small business’s chief goal should always be to maintain a minimum Low-5 bank rating for at least three months. Hence that means an average $10,000 balance.

This is because, without at least a Low-5 rating, the majority of banks will operate under the assumption that the business has little to no ability to repay a loan or a business line of credit.

One thing to keep in mind – you will never actually see this number. The bank will just keep this number in its back pocket.

Check out our professional research on bank ratings, the little-known reason why you will – or won’t – get a bank loan for your business during a recession.

The Bank Credit Score Rating Ranges

The numbers work out to the following ranges:

High-5 – account balance of $70,000-99,999
Mid-5 – account balance of $40,000-69,999
Low-5 – balance of $10,000-39,000
High-4 – 7,000-9,999
Mid-4 – $4,000-6,999
Low-4 – $1,000-3,999

Do not forget, your small business needs to be at the Low-5 level bank score or better.

Rocking Your Business Bank Credit Score in a Recession

It should be clear that the thrust behind bank credit scores is to show proof that your small business can pay back its financial obligations in an expeditious manner. Therefore, yes, you will need to maintain a minimum balance for at least three months. Every cycle is based on the balance rating during the previous three month period.

Congruency

It is also vital that the business owner ensures that their business bank accounts are reported exactly the same way all of their business records are, and with the exact same physical address and phone number. And it cannot be a post office box!

It is imperative that each and every credit agency and trade credit vendor, every record keeper also lists the business name and address the exact same way. No lender is going to stop to consider all of the ways that a business might be listed, when they look into the business’s creditworthiness. Therefore, if they are unable to find what they need easily, they will just deny the application.

Note: these are record keepers of financial records, income tax, web addresses and e-mail addresses, directory assistance, etc.

Congruency also matters in the event you use a fictitious name or DBA, AKA a ‘doing business as’ status.

Responsible Account Management

Plus the business must manage its bank account responsibly. This means that the small business should avoid writing non-sufficient funds (NSF) checks at all costs, because that decimates bank ratings. Non-sufficient-funds checks are something which no business can afford to let happen. It is even a good idea for the business to add overdraft protection to their bank account as soon as possible, in order to avoid NSFs.

Positive Cash Flow

Your business must show a positive cash flow. The cash coming in and leaving a company’s bank account should reflect a positive free cash flow. A positive free cash flow is the amount of revenue left over after a company has paid all of its expenses. When an account shows a positive cash flow it indicates that the business is generating more revenue than is used to run the company. That means the bank will feel that the business can pay its bills.

Consistent Deposits

Finally, understand that banks are highly motivated to lend to a business with consistent deposits. A business owner must also make regular deposits in order to maintain a positive bank rating. The business owner must make a lot of consistent deposits. And they need to be more than the withdrawals they are making, in order to have and maintain a good bank rating. If they can do that, then they will have a good bank credit score.

Check out our professional research on bank ratings, the little-known reason why you will – or won’t – get a bank loan for your business during a recession.

An Alternative to Jacking Up Your Business Bank Credit Score in a Recession

Of course we are talking about business credit building here. Business credit is an asset which can help your company in years to come.

Small business credit is credit in a small business’s name. It doesn’t tie to a business owner’s consumer credit, not even if the owner is a sole proprietor and the solitary employee of the company.

As a result, a business owner’s business and consumer credit scores can be very different.

The Benefits

Due to the fact that small business credit is distinct from consumer, it helps to protect an entrepreneur’s personal assets, in the event of a lawsuit or business insolvency.

Also, with two distinct credit scores, a business owner can get two separate cards from the same vendor. This effectively doubles buying power.

Another benefit is that even startups can do this. Heading to a bank for a business loan can be a formula for frustration. But building small business credit, when done the right way, is a plan for success.

Consumer credit scores depend on payments but also various other elements like credit use percentages.

But for small business credit, the scores truly just hinge on whether a business pays its invoices punctually.

The Process

Building business credit is a process, and it does not occur without effort. A business has to actively work to build company credit.

That being said, it can be done easily and quickly, and it is much faster than establishing consumer credit scores.

Merchants are a big component of this process.

Doing the steps out of sequence will result in repetitive denials. Nobody can start at the top with small business credit. For instance, you can’t start with retail or cash credit from your bank. If you do, you’ll get a denial 100% of the time.

Company Fundability

A small business has to be fundable to lenders and merchants.

For this reason, a small business will need a professional-looking web site and e-mail address. And it needs to have website hosting bought from a merchant such as GoDaddy.

In addition, business telephone and fax numbers must have a listing on ListYourself.net.

Additionally, the company phone number should be toll-free (800 exchange or the like).

A business will also need a bank account dedicated solely to it, and it needs to have every one of the licenses necessary for operation.

Licenses

These licenses all have to be in the perfect, correct name of the business. And they need to have the same company address and phone numbers.

So note, that this means not just state licenses, but possibly also city licenses.

Check out our professional research on bank ratings, the little-known reason why you will – or won’t – get a bank loan for your business during a recession.

Dealing with the IRS

Visit the IRS website and acquire an EIN for the business. They’re totally free. Select a business entity like corporation, LLC, etc.

A small business can get started as a sole proprietor. But they will most likely want to change to a variety of corporation or an LLC.

This is in order to minimize risk. And it will optimize tax benefits.

A business entity will matter when it pertains to taxes and liability in case of a lawsuit. A sole proprietorship means the entrepreneur is it when it comes to liability and tax obligations. No one else is responsible.

Sole Proprietors Take Note

If you run a company as a sole proprietor, then at least be sure to file for a DBA. This is ‘doing business as’ status.

If you do not, then your personal name is the same as the company name. Consequently, you can end up being directly liable for all company debts.

Additionally, per the IRS, with this arrangement there is a 1 in 7 possibility of an IRS audit. There is a 1 in 50 chance for corporations! Prevent confusion and substantially decrease the odds of an IRS audit simultaneously.

But treat any DBA filing as a steppingstone to incorporating.

Monitor Your Business Credit

Know what is happening with your credit. Make sure it is being reported and deal with any errors ASAP. Get in the habit of checking credit reports. Dig into the particulars, not just the scores.

We can help you monitor business credit at Experian and D&B for 90% less than it would cost you at the CRAs.

Update Your Data

Update the information if there are inaccuracies or the info is incomplete.

Fix Your Business Credit

So, what’s all this monitoring for? It’s to contest any inaccuracies in your records. Errors in your credit report(s) can be corrected. But the CRAs often want you to dispute in a particular way.

Disputes

Disputing credit report mistakes commonly means you mail a paper letter with copies of any proofs of payment with it. These are documents like receipts and cancelled checks. Never send the original copies. Always mail copies and keep the original copies.

Fixing credit report errors also means you precisely spell out any charges you contest. Make your dispute letter as crystal clear as possible. Be specific about the concerns with your report. Use certified mail so that you will have proof that you sent in your dispute.

A Word about Building Business Credit

Always use credit responsibly! Never borrow more than what you can pay off. Keep track of balances and deadlines for payments. Paying off promptly and in full will do more to raise business credit scores than just about anything else.

Building company credit pays. Excellent business credit scores help a company get loans. Your lending institution knows the small business can pay its debts. They understand the company is authentic.

The company’s EIN links to high scores and your business bank credit score in a recession will not matter quite so much.

Takeaways for How to Rock Your Business Bank Credit Score in a Recession

Start with consistent deposits, even if you cannot make terribly high ones. Just, start to become dependable in how you add money to your business’s bank account. Whether you deposit every week or every other week, etc. is your own choice. Opt for whatever you are most likely to be able to do.

This can also help you with both positive cash flow and responsible account management. Hence you get a lot of bang for your buck here – quite literally.

The other fairly simple task you can undertake is to make sure your business address and other particulars are perfectly congruent across the board. This means, for example, that if you wrote Ltd. on your D&B D-U-N-S number application, but Limited when you applied for a business bank account, you will need to take measures to get these two areas in sync.

Generally, the easiest way to do this is by going through everything and simply copying and pasting your information.

The post How to Rock your Business Bank Credit Score in a Recession appeared first on Credit Suite.

Who Ya Gonna Call? Don’t Let a Bad Small Business Credit Score Haunt You

It’s that time of year when you’re thinking about spooky things lurking behind every corner. But your business credit score doesn’t have to be one of those things that goes bump in the night. You can call on these bad small business credit score busters to rescue you.

5 Bad Small Business Credit Score Busters

When it comes to a small business credit score, no score is the same as a bad score. So, whether you actually have bad small business credit, or you don’t have a small business credit score at all, you are in the same boat. The best place to start is at the beginning.

Bad Small Business Credit Score Buster #1: A Properly Established Business Credit File

No business credit is the same as bad business credit. The trick is, most people miss out on all the treats credit in the name of their business has to offer because they think they have a business credit score. They think that if they have a business and pay all the business bills on time, they’re golden. This is a trick indeed.

The truth is, while you do need to know how to build your business credit score, you have to do some pre-work, so to speak. The problem is, business credit does not develop the same way personal credit does. You have to actively establish business credit before you can build a small business score.

How to Establish Business Credit

The key to establishing business credit is to set up your business to be a separate, fundable entity apart from you the owner. This ensures that payments on business accounts are on your business credit rather than your personal credit. Here’s how.

Check out our trustworthy list of seven vendors to help you build business credit. Conquer any recession!

Contact Information

You need separate business contact information. That doesn’t mean you have to get a separate phone line or a separate location. You can run your business from your home or on your computer.

Actually, you can get a business phone number easily that works over the internet instead of phone lines ( this is called VOIP, or voice over internet protocol). Even better, it will forward to any phone you want it to so you can use your personal cell phone or landline. Calls to your business number will ring straight to you.

In addition, you can use a virtual office for a business address. This is a business that offers a physical address for a fee, and sometimes they even offer mail service and live receptionist services. Furthermore, some offer meeting spaces for those times you may need to meet a client or customer in person.

EIN

You also need an EIN. This is an identifying number for your business that is similar to your personal SSN. You can get one for free from the IRS.

Incorporate

Incorporating your business as an LLC, S-corp, or corporation is necessary to fundability. It not only offers liability protection, but it is vital in separating a business from its owner.

Business Bank Account

You have to open a separate, dedicated business bank account. First, it will help you keep track of business finances. It will also help you keep them separate from personal finances for tax purposes.

Also, several types of funding are not available without a business bank account. Many lenders and credit cards want to see one with a minimum average balance. Another reason is, you cannot get a merchant account without a business account at a bank. That means, you cannot take credit card payments. Even more important, a lot of lenders consider the date a business starts to be the date the business bank account opens. Time in business is an important factor in business credit.

Best Bank Accounts for Small Businesses

So, what are the best bank accounts for small businesses? There are tons out there, and each business’s needs are different. However, there are a few things you should consider when trying to find the best bank account for your business.

Fees

This is first because it’s the most obvious, but it isn’t necessarily the most important, at least not in the way you may think. You do not necessarily want the account with the lowest fee. While there are probably free bank accounts out there, those may not actually be the best bank accounts for small businesses. Why? Sometimes you really do get what you pay for. Which leads to the next thing you need to consider.

Number of Allowed Transactions

You need to consider the number of transactions allowed per month before you are charged additional fees. Many free accounts allow a very small number of transactions. This is fine for some small businesses, but you also need to consider growth when determining how many transactions per month you need.

Even business bank accounts that are not free do not usually offer an unlimited number of transactions. Many have a transaction limit, and if you go over, will they charge additional fees. The key is to figure out not only how many transactions you need currently, but how many you may need as you grow.

Also, make sure you can upgrade your account if you see you are consistently going over the allowed number of transactions. Find out what is entailed in doing so. You don’t want to be in a situation where you have to get a whole new account if you can help it. That’s a pain. Just be sure to keep an eye on how many transactions you do each month.

Required Cash Deposits

Take a look at the deposit amounts allowed or required each month. Make sure you can meet them.

Minimum Balance Requirements

Are you required to keep a minimum balance in the account to avoid additional fees? If so, make sure you can meet that requirement.

Extras

If you find more than one account that is perfect for your business, take a look at the extras to break the tie. Do they offer mobile banking? Will they waive fees if you hit a certain number of a specific type of transaction? Do they offer an app or text banking?

Finding the best bank accounts for small businesses takes a little finesse, because what works best for one business may not be what’s best for yours. This should get you started.

Licenses

For a business to be legitimate it has to have all of the necessary licenses it needs to run. If it doesn’t, red flags are going to fly up all over the place. Do the research you need to do to ensure you have all of the licenses necessary to legitimately run your business at the federal, state, and local levels.

D-U-N-S Number

This is a number issued by Dun & Bradstreet. They are the largest and most commonly used business credit reporting agency. You cannot be in their system without this number. Get one for free on their website.

Check out our trustworthy list of seven vendors to help you build business credit. Conquer any recession!

Bad Small Business Credit Score Buster #2: Continuity in Business Information

While this buster does not directly affect your business credit score, a lack of it can definitely get you denied, even with a stellar credit score. Here’s the deal. Fraud is rampant, and lenders do not like to take chances. If they see one document with your business name that has an ampersand and one that uses the word “and” in place of the ampersand, it will set off fraud concerns and they will deny the loan. This can happen even if you have a good business credit score. Your business name has to be exactly the same everywhere.

The same is true for addresses and phone numbers. If you have one address on your website and a different one on insurance papers, it’s going to be a problem. All information related to your business has to be the same on all documents across the board.

Bad Small Business Credit Score Buster #3: Credit Line Hybrid

A credit line hybrid allows you to fund your business without putting up collateral, and you only pay back what you use. Qualifying is not as hard as you may think. You do need good personal credit, at least 685. In addition, you can’t have any liens, judgments, bankruptcies or late payments. Also, in the past 6 months you should have fewer than 5 credit inquiries, and you should have less than a 45% balance on all business and personal credit cards. It’s also preferred that you have established business credit as well as personal credit.

But how is it a bad business credit score buster? Here’s how. If you do not meet the qualifications, you can take on a credit partner that does meet them. Since it reports to the business credit reporting agencies in the business’s name, you can build credit for your business without having good credit to begin with.

Bad Small Business Credit Score Buster #3: Vendor Credit

Obviously small business lenders are not going to approve applications for loans based on a business credit score if there is no business credit score. Thus, you need a way to build a score without already having a score. This is the time when you need to know how to build your business credit score. Vendor credit is where you start after your business is set up properly.

Vendor credit is offered by what we like to refer to as “starter vendors.” These are companies that will extend net terms on invoices without a credit check. Then, when you pay the invoice, they report your payment to the business credit reporting agencies.

This helps you build business credit without already having business credit. However, for it to work, you have to have your business set up as outlined above. Also, since they do not check credit, they do have other ways of reducing risk. These vary by vendor, but some general things they look at include:

Length of time in business
Average balance in business bank account
Revenues

Usually it is some combination of these factors and others that starter vendors are looking for when it comes to extending net terms.

Bad Small Business Credit Score Buster #3: Responsible Use of Store Credit and Fleet Credit

Once you have some starter vendors reporting your payments, you will start to build a small business credit score. At that point, you will be eligible to get approval from some store credit cards. These are cards from retailers that are meant to be used at their store only. Apply with your business name, EIN, and contact information so they will report to your business credit report and not your personal credit report, thus building strong business credit.

As they report payments, your business credit score will continue to grow, and you can apply for fleet credit. These cards are meant to be used for auto repair and maintenance and fuel costs. However, after you get enough of them reporting payments, your score will grow to the point you can apply for cash credit, meaning cards that can be used anywhere on anything, in your business name.

The key to this is, you have to handle the credit responsibly. If you do not make consistent, on-time payments, you will achieve the opposite effect.

Call on These Bad Small Business Credit Score Busters and Never be Haunted Again

Whether you need to establish a small business credit score or annihilate a bad one, at least one of these tips should help. If your business isn’t already set up properly, do that now. Even if you do know how to build your business credit score, it will not matter if your business is not set up properly. The longer you wait the harder it gets.

After that, be sure anytime you make changes you make them everywhere, and start working on vendor credit. Small business lenders take all of this into account, so starting as soon as possible to get everything in line is vital.

Check out our trustworthy list of seven vendors to help you build business credit. Conquer any recession!

The post Who Ya Gonna Call? Don’t Let a Bad Small Business Credit Score Haunt You appeared first on Credit Suite.

It’s Science-backed With Our Foolproof Research: How to Build a Business Credit Score in a Recession

We Smuggled Out Hidden Information on How to Build a Business Credit Score in a Recession

Our research dynamos can teach YOU how to build a business credit score in a recession! The economy doesn’t have to be perfect to build business credit quickly and effectively.

Building better business credit means that your small business attains opportunities you never assumed it would.

You can get new equipment, bid on real property, and deal with the company payroll. And you can do so even when times are a bit lean. This is specifically helpful in holiday businesses, where you can go for calendar months with simply negligible sales.

Because of this, you ought to tackle building your company credit. Enhance and maintain your scores and you will have these possibilities. Do not, and either you do not get these opportunities, or they will cost you a lot more. And no company owner wants that.

So you need to know what affects your business credit before you can make it better.

How to Build a Business Credit Score in a Recession: Credit History Length Is Vital

This is essentially the length of time your business has been using business credit. Obviously newer businesses will have short credit histories. While there is not too much you can particularly do about that, do not despair.

Credit reporting agencies will also consider your personal credit score and your own history of payments. If your consumer credit is good, and particularly if you have a fairly extensive credit history, then your individual credit can come to the rescue of your company.

So that is, you did not just get your first credit card recently.

Normally the converse is also right. Hence if your individual credit history is poor, then it will have a bearing on your business credit scores. And it will do so until your small business and personal credit can be split up.

How to Build a Business Credit Score in a Recession: Don’t Allow Your Credit Utilization Rate to Harm Your Small business

Your credit utilization rate is just the amount of cash you have on credit. So it is then divided by your total available credit. Lenders in general do not wish to see this exceed 30%. Hence for every $100 in credit, do not borrow more than $30 of that.

If this percent is climbing, you’ll have to spend down and pay off your debts prior to borrowing more.

How to Build a Business Credit Score in a Recession: Your Payment History Truly Matters

Late repayments will affect your company credit score for a good seven years. If you pay your company debts off, as fast as possible, then you can make a very real difference when it relates to your credit scores.

Ensure that you pay promptly. And you will enjoy the rewards of promptness.

Learn more here and get started toward building business credit attached to your company’s EIN and not your SSN. Get money even in a recession!

How to Build a Business Credit Score in a Recession: Your Personal Credit Can Bear upon Your Business Credit

A substandard business year could end up on your personal credit score. And in case your business has not been around for too long, it will directly influence your company credit.

But don’t worry, you can separate them easily. Do so by taking measures to unlink them.

For instance, get credit cards exclusively for your firm. Or open business checking accounts and other bank accounts (or perhaps get a business loan). And then the credit reporting bureaus will begin to address your personal and small business credit independently.

Also, make sure to incorporate. Or at least file a DBA (doing business as) status. You can also pay for your company’s debts with your firm credit card or checking account. And make certain it is the company’s full name on the bill and not your own.

How to Build a Business Credit Score in a Recession: The Credit Reporting Bureaus Can Just Plain Get It Wrong

Just like each organization out there, credit reporting agencies like Equifax and Experian are only as good as their information. If your firm’s name is like another’s, there can possibly be some errors.

So check those reports, and your company report at Dun & Bradstreet, PAYDEX. Remain on top of these reports and contest charges with documentation and clear communications. Do not just let them stay incorrect! You can fix this!

And while you’re at, it you should also be overseeing the credit reporting agency which solely handles personal and not business credit, TransUnion. If you do not know how to pull a credit report, do not fret. It’s easy.

An Alternative – Business Credit!

Business credit is credit in a small business’s name. It doesn’t attach to an owner’s consumer credit, not even if the owner is a sole proprietor and the only employee of the company. Consequently, a business owner’s business and consumer credit scores can be very different.

The Benefits

Since small business credit is independent from individual, it helps to secure a business owner’s personal assets, in the event of a lawsuit or business bankruptcy. Also, with two separate credit scores, a small business owner can get two different cards from the same merchant. This effectively doubles buying power.

Another advantage is that even new ventures can do this. Visiting a bank for a business loan can be a recipe for disappointment. But building business credit, when done the right way, is a plan for success.

Personal credit scores depend upon payments but also additional factors like credit usage percentages. But for business credit, the scores truly only hinge on whether a company pays its bills on time.

Learn more here and get started toward building business credit attached to your company’s EIN and not your SSN. Get money even in a recession!

The Process

Growing business credit is a process, and it does not happen automatically. A business needs to actively work to establish business credit. Nevertheless, it can be done easily and quickly, and it is much more rapid than establishing personal credit scores.

Merchants are a big part of this process.

Doing the steps out of order will result in repetitive denials. No one can start at the top with company credit. For instance, you can’t start with store or cash credit from your bank. If you do you’ll get a rejection 100% of the time.

Business Fundability

A business has to be genuine to lenders and merchants. For that reason, a business will need a professional-looking web site and email address, with site hosting bought from a merchant such as GoDaddy.

And company telephone and fax numbers ought to have a listing on ListYourself.net.

Likewise the company telephone number should be toll-free (800 exchange or comparable).

A business will also need a bank account dedicated solely to it, and it has to have all of the licenses essential for running. These licenses all have to be in the correct, correct name of the small business, with the same business address and phone numbers.

So bear in mind that this means not just state licenses, but possibly also city licenses.

Learn more here and get started toward building business credit attached to your company’s EIN and not your SSN. Get money even in a recession!

Dealing with the Internal Revenue Service

Visit the Internal Revenue Service web site and acquire an EIN for the company. They’re totally free. Select a business entity like corporation, LLC, etc.

A company can get started as a sole proprietor. But they will more than likely wish to change to a kind of corporation or partnership to decrease risk and maximize tax benefits.

A business entity will matter when it comes to taxes and liability in case of a lawsuit. A sole proprietorship means the entrepreneur is it when it comes to liability and taxes. No one else is responsible.

If you operate a small business as a sole proprietor, then at the very least be sure to file for a DBA (‘doing business as’) status.

If you do not, then your personal name is the same as the business name. As a result, you can wind up being directly responsible for all company debts.

Additionally, according to the IRS, by having this structure there is a 1 in 7 possibility of an IRS audit. There is a 1 in 50 chance for corporations! Steer clear of confusion and significantly decrease the chances of an IRS audit at the same time.

Starting Off the Business Credit Reporting Process

Begin at the D&B website and get a cost-free DUNS number. A DUNS number is how D&B gets a company in their system, to produce a PAYDEX score. If there is no DUNS number, then there is no record and no PAYDEX score.

Once in D&B’s system, search Equifax and Experian’s websites for the company. You can do this here. If there is a record with them, check it for correctness and completeness. If there are no records with them, go to the next step in the process.

By doing this, Experian and Equifax will have something to report on.

Trade Lines

First you must establish trade lines that report. This is also called vendor accounts. Then you’ll have an established credit profile, and you’ll get a business credit score.

And with an established business credit profile and score you can start getting revolving store and cash credit.

These types of accounts have the tendency to be for the things bought all the time, like coffee, shipping boxes, outdoor work wear, ink and toner, and office furniture.

But first off, what is trade credit? These trade lines are credit issuers who will give you initial credit when you have none now. Terms are commonly Net 30, instead of revolving.

Hence if you get approval for $1,000 in vendor credit and use all of it, you must pay that money back in a set term, like within 30 days on a Net 30 account.

Details

Net 30 accounts have to be paid in full within 30 days. 60 accounts have to be paid in full within 60 days. In contrast to with revolving accounts, you have a set time when you must pay back what you borrowed or the credit you made use of.

To kick off your business credit profile the right way, you should get approval for vendor accounts that report to the business credit reporting bureaus. As soon as that’s done, you can then use the credit.

Then pay back what you used, and the account is on report to Dun & Bradstreet, Experian, or Equifax.

Not every vendor can help like true starter credit can. These are vendors that will grant an approval with hardly any effort. You also need them to be reporting to one or more of the big three CRAs: Dun & Bradstreet, Equifax, and Experian.

But you may have to apply more than one time to these vendors, and you may need to purchase some things you don’t need, to confirm you are responsible and will pay promptly. Consider giving nonessential things to charitable organizations.

Revolving Store Credit

Once there are 3 or more vendor trade accounts reporting to at least one of the CRAs, progress to revolving store credit. These are service providers such as Office Depot and Staples.

Use the small business’s EIN on these credit applications.

Fleet Credit

Are there more accounts reporting? Then move onto fleet credit. These are businesses like BP and Conoco. Use this credit to purchase fuel, and to repair and take care of vehicles. Make sure to apply using the small business’s EIN.

Cash Credit

Have you been sensibly handling the credit you’ve gotten up to this point? Then move onto more universal cash credit. Keep your SSN off these applications; use your EIN instead.

These are usually MasterCard credit cards. If you have more trade accounts reporting, then these are feasible.

Monitor Your Business Credit

Know what is happening with your credit. Make sure it is being reported and deal with any mistakes ASAP. Get in the practice of checking credit reports. Dig into the specifics, not just the scores.

We can help you monitor business credit at Experian and D&B for 90% less. Update the information if there are errors or the info is incomplete.

Disputing Errors

So, what’s all this monitoring for? It’s to dispute any errors in your records. Errors in your credit report(s) can be corrected. But the CRAs normally want you to dispute in a particular way.

Disputing credit report inaccuracies usually means you send a paper letter with copies of any proofs of payment with it. These are documents like receipts and cancelled checks. Never mail the originals. Always mail copies and retain the original copies.

Disputing credit report mistakes also means you specifically spell out any charges you challenge. Make your dispute letter as clear as possible. Be specific about the problems with your report. Use certified mail so that you will have proof that you mailed in your dispute.

A Word about Building Business Credit

Always use credit sensibly! Don’t borrow more than what you can pay off. Keep an eye on balances and deadlines for repayments. Paying in a timely manner and in full will do more to raise business credit scores than pretty much anything else.

Establishing business credit pays. Great business credit scores help a business get loans. Your lending institution knows the business can pay its debts. They know the business is bona fide.

The small business’s EIN attaches to high scores, and lending institutions won’t feel the need to demand a personal guarantee.

How to Build a Business Credit Score in a Recession: The Takeaways

Once you find out what influences your small business credit score, you are that much nearer to being able to build a business credit in a recession.

Learn more here and get started on how to build a business credit score in a recession.

The post It’s Science-backed With Our Foolproof Research: How to Build a Business Credit Score in a Recession appeared first on Credit Suite.

3 Recession Factors that Can Devastate a New Business Credit Score

Did You Know These Recession Factors Can Devastate a New Business Credit Score?

These are three ways you can devastate a new business credit score. Do not let anything like this happen to you! These are easily preventable. Save your business credit scores!

Uh, oh. You tried to build a commercial credit score without truly thinking it through and taking into consideration what affects small business credit rating. Let’s take a look at 3 factors that can devastate your business credit scores. And how to fix them.

And you do have to fix them, because this is what affects a business credit rating.

In particular, this is an issue during economic downturns.

Recession Era Financing and COVID-19

As the novel coronavirus continues to transform our economy, it becomes more imperative than ever to keep your business credit scores high. It’s no time to make preventable errors – like these three.

Devastate a New Business Credit Score: 3. You Used More Credit Than Your Company Could Handle

Credit can be intoxicating. Take a look at all that free cash! Look at all the important things your company needs!

Wait; wait, whoa, time out!

It is not free cash. It’s a loan, really. All credit is whether it’s commercial or consumer. If you have gone on a wild credit spree, your credit rating is going to be affected. How? Delinquency.

When you are that much in hock, it may be tricky to stay on top of the payments. Late payments will directly and adversely impact your business credit score. So be responsible with credit. This isn’t gambling; it’s your livelihood and the livelihood of anyone who works for you.

Devastate a New Business Credit Score: 2. You Didn’t Stay on Top of Your Credit Scores or Dispute CRA Mistakes

While credit reports aren’t exactly page turners, you should still be staying on top of them.

Don’t have time to read through credit reports? Then use a monitoring service. Experian offers Business Credit Advantage. PAYDEX has Credit Reporter. And Equifax has Business Credit Monitor. If you prefer a free version for credit alerts, you can try CreditSignal.

Fix Your New Business Credit Score Now!

The point of all of that monitoring is to spot errors and fix them. If any one of your credit reports has mistakes, then you must get on top of that, without delay. Disputing credit report errors generally means you send a paper letter with copies of any proofs of payment with it.

These are documents like receipts and cancelled checks.

Details of How to Fix a New Business Credit Score

Never send the originals. Always send copies and retain the originals. Precisely detail any charges you dispute. Make your dispute letter as crystal clear as possible. Use certified mail so that you will have proof that you sent in your dispute.

Contesting an error quickly means your credit reports will be corrected more quickly.

Find out why so many companies are using our proven methods to improve their business credit scores, even during a recession.

Devastate a New Business Credit Score: 1. You Didn’t Separate Your Company and Individual Credit (or You Didn’t Do So Quickly)

The longer and more intimately your personal and business finances are entangled, the more likely it is that credit reporting agencies will take your consumer credit into account when looking at your company.

This doesn’t give your company a chance to make its own credit ‘name’, as it were. When you examine your company credit score vs personal credit score, they should be different.

You Can Change a New Business Credit Score

Paying off your business’s charges with personal charge cards or checks; not getting a separate IRS EIN number for your company; and not putting your business’s bills in the company’s name can all aggravate this problem.

And the Internal Revenue Service will probably have something to say about your business not having its own identification number.

Fix a New Business Credit Score Now!

So to repair this, your mission is as follows:

Get an EIN first. You can apply online after you determine your eligibility. That is, if your business is located within the US, etc.
Visit your local bank and open a small business banking account
Contact local vendors and get your company’s bills put into the company’s name. While you’re at it, see if you can start to build trade credit with them
Always pay the business’s bills with your business accounts or credit

Bonus – Business Credit Building

Factors that can devastate your business credit scores include not building business credit in the proper manner. So here’s how to do that. Corporate credit is credit in a small business’s name.

It isn’t attached to an owner’s individual credit, not even when the owner is a sole proprietor and the solitary employee of the business. Therefore, an entrepreneur’s business and individual credit scores can be very different.

The Advantages

Because business credit is detached from consumer, it helps to safeguard an entrepreneur’s personal assets, in the event of a lawsuit or a business bankruptcy. Also, with two distinct credit scores, an entrepreneur can get two separate cards from the same merchant.

This effectively doubles buying power.

Another advantage is that even startup businesses can do this. Heading to a bank for a business loan can be a recipe for disappointment. But don’t worry. Building small business credit, when done correctly, is a plan for success.

Personal credit scores rely on payments but also various other considerations like credit usage percentages. But for business credit, the scores actually just depend on whether a small business pays its bills in a timely manner.

The Process

Building Small Business Credit is a process, and it does not occur automatically. A business must proactively work to build corporate credit. Nonetheless, it can be done readily and quickly, and it is much quicker than establishing personal credit scores. Merchants are a big part of this process.

Undertaking the steps out of order will cause repeated rejections. Nobody can start at the top with corporate credit. For instance, you can’t start with store or cash credit from your bank. If you do you’ll be turned down 100% of the time.

Company Legitimacy

A business needs to be legitimate to lenders and vendors. As a result, a corporation will need a professional-looking web site and e-mail address, with site hosting purchased from a supplier such as GoDaddy. Plus company telephone and fax numbers ought to be listed on 411. com. Also the company telephone number should be toll-free (800 exchange or comparable).

A corporation will also need a bank account dedicated purely to it, and it needs to have all of the licenses required for operating. These licenses all have to be in the precise, appropriate name of the corporation, with the same company address and telephone numbers.

Note that this means not just state licenses, but possibly also city licenses.

Find out why so many companies are using our proven methods to improve their business credit scores, even during a recession.

Dealing with the IRS

Visit the Internal Revenue Service web site and get an EIN for the small business– they’re free. Choose a business entity like corporation, LLC, etc.

A small business can start off as a sole proprietor but will probably want to switch to a kind of corporation or partnership to reduce risk and take full advantage of tax benefits.

And a business entity will matter when it comes to tax obligations and liability in case of a lawsuit. A sole proprietorship means the owner is it when it comes to liability and taxes. No one else is responsible.

DBAs

If you operate a small business as a sole proprietor at least file for DBA (‘ doing business as’) status. If you do not, then your personal name is the same as the corporate name. Consequently, you can end up being personally liable for all company debts.

Also, per the IRS, by having this arrangement there is a 1 in 7 possibility of an IRS audit. There is a 1 in 50 probability for incorporated businesses! Avoid confusion and considerably lower the chances of an Internal Revenue Service audit at the same time.

And see a DBA as a stepping stone to incorporating. It shouldn’t be your final destination for your choice of business entity.

Kicking Off the Business Credit Reporting Process

Begin at the D&B web site and obtain a free DUNS number. A DUNS number is how D&B gets a small business in their system, to generate a PAYDEX score. If there is no DUNS number, then there is no record and no PAYDEX score.

Once in D&B’s system, search Equifax and Experian’s sites for the company. You can do this at https://www.creditsuite.com/reports/. If there is a record with them, check it for accuracy and completeness. If there are no records with them, go to the next step in the process.

By doing so Experian and Equifax will have activity to report on.

Vendor Credit

First you need to build trade lines that report. This is also known as vendor credit. Then you’ll have an established credit profile, and you’ll get a business credit score. And with an established business credit profile and score you can begin obtaining revolving store and cash credit.

These sorts of accounts tend to be for the things bought all the time, like shipping boxes, outdoor work wear, ink and toner, and office furniture.

What is Trade Credit?

But first of all, what is Trade Credit? These trade lines are creditors who will give you preliminary credit when you have none now. Terms are normally Net 30, as opposed to revolving.

Hence if you get approval for $1,000 in vendor credit and use all of it, you must pay that money back in a set term, such as within 30 days on a Net 30 account.

Net 30 accounts need to be paid in full within 30 days. 60 accounts have to be paid fully within 60 days. Unlike with revolving accounts, you have a set time when you must pay back what you borrowed or the credit you used.

Start Building Business Credit

To kick off your business credit profile the proper way, you should get approval for vendor accounts that report to the business credit reporting bureaus.

As soon as that’s done, you can then make use of the credit, repay what you used, and the account is reported to Dun & Bradstreet, Experian, or Equifax.

Vendor Credit Helps!

Not every vendor can help in the same way true starter credit can. These are merchants that will grant an approval with nominal effort. You also want them to be reporting to one or more of the big three CRAs: Dun & Bradstreet, Equifax, and Experian.

You want 3 of these to move onto the next step, which is revolving store credit.

Uline Shipping Supplies

Uline Shipping Supplies is a true starter vendor. Find them online at uline.com. They sell shipping, packing, and industrial supplies, and they report to D&B.

You must have a DUNS number. They will request 2 references and a bank reference. The initial few orders may need to be prepaid to initially get approval for Net 30 terms.

Quill Office Supplies

Quill Office Supplies is an additional true starter vendor. Find them online at quill.com. They sell office, packaging, and cleaning supplies, and they report to D&B and Experian.

Place an initial order first unless the D&B score is developed. Normally they’ll put you on a 90 day prepayment schedule.

If you order items each month for 3 months, they will commonly approve you for a Net 30 Account.

Grainger Industrial Supply

Grainger Industrial Supply is also a true starter vendor. Find them online at grainger.com.

They sell safety equipment, plumbing supplies, and more, and they report to D&B. You will need to have a business license, EIN, and a DUNS number. For less than $1000 credit limit they will approve virtually any person with a business license.

Find out why so many companies are using our proven methods to improve their business credit scores, even during a recession.

Accounts That Do Not Report

Non-Reporting Trade Accounts can also be helpful. While you do want trade accounts to report to at the very least one of the CRAs, a trade account which does not report can nevertheless be of some worth.

You can always ask non-reporting accounts for trade references. And also credit accounts of any sort will help you to better even out business expenses, thereby making financial planning less complicated. These are providers like PayPal Credit, T-Mobile, and Best Buy.

Retail Credit

Once there are 3 or more vendor trade accounts reporting to at least one of the CRAs, move onto revolving store credit. These are companies like Office Depot and Staples. These companies are more likely to have items you need.

Use the corporation’s EIN on these credit applications.

Fleet Credit

Are there more accounts reporting? Then move onto fleet credit. These are businesses such as BP and Conoco. Use this credit to buy, repair, and maintain vehicles. Make sure to apply using the small business’s EIN.

If you already have adequate trade lines, you can get an approval.

Cash Credit

Have you been sensibly managing the credit you’ve up to this point? Then move to more universal cash credit. These are businesses such as Visa and MasterCard. Keep your SSN off these applications; use your EIN instead.

These are commonly MasterCard credit cards. If you have more trade accounts reporting, then these are attainable.

Monitor Your Business Credit

Know what is happening with your credit. Make certain it is being reported and take care of any mistakes as soon as possible. Get in the practice of checking credit reports and digging into the specifics, and not just the scores.

We can help you monitor business credit at Experian and D&B for 90% off.

At Equifax, you can monitor your account at: equifax.com/business/business-credit-monitor-small-business.

Fix a New Business Credit Score Now!

Update the info if there are inaccuracies or the information is incomplete. At D&B, you can do this at: https://iupdate.dnb.com/iUpdate/viewiUpdateHome.htm.

For Experian, go here: experian.com/small-business/business-credit-information.jsp.

Equifax: equifax.com/business/small-business.

Contesting Errors Which Can Devastate a New Business Credit Score

What’s all this monitoring for? It’s to contest any mistakes in your records. Errors in your credit report( s) can be taken care of. But the CRAs often want you to dispute in a particular way.

Get your small business’s PAYDEX report at: dnb.com/about-us/our-data.html.

You can get your company’s Experian report at: businesscreditfacts.com/pdp.aspx?pg=SearchForm.

And get your Equifax business credit report at: equifax.com/business/credit-information.

Disputes

Disputing credit report mistakes normally means you mail a paper letter with copies of any evidence of payment with it. These are documents like receipts and cancelled checks. Never mail the original copies. Always mail copies and keep the originals.

Disputing credit report mistakes also means you precisely detail any charges you contest. Make your dispute letter as crystal clear as possible. Be specific about the concerns with your report. Use certified mail so that you will have proof that you mailed in your dispute.

Details

Also, dispute your or your corporation’s Equifax report by following the instructions here: equifax.com/small-business-faqs/#Dispute-FAQs.

Dispute inaccuracies on your or your small business’s Experian report by following the directions here: experian.com/small-business/business-credit-information.jsp.

So, D&B’s PAYDEX Customer Service contact number is here: dandb.com/glossary/paydex.

Also, always use credit responsibly! Don’t borrow more than what you can pay off. Track balances and deadlines for payments. Paying punctually and fully will do more to increase business credit scores than virtually anything else.

Factors That Can Devastate a New Business Credit Score – Takeaways

Building corporate credit pays. Good business credit scores help a corporation get loans. Your lending institution knows the corporation can pay its financial obligations. They know the company is for real.

The corporation’s EIN links to high scores, and creditors won’t feel the need to ask for a personal guarantee.

Save your business credit scores! Learn more here and get started toward getting rid of these factors that can devastate a new business credit score.

The post 3 Recession Factors that Can Devastate a New Business Credit Score appeared first on Credit Suite.

Beat the Economic Downturn With Credit Score Hacks Every Business Owner Should Know

It’s looking a lot like the novel coronavirus is leading to an economic downturn. But you can still hack a great business credit score. Here’s how.

Do You Know These Credit Score Hacks? They’re Even More Important in an Economic Downturn!

Economic downturn got you down? Beat the recession with these credit score hacks for every business owner.

Establishing business credit means that your firm acquires chances you never believed you would. You can get all-new equipment, bid on buildings, and cover the company payroll. And you can do so even when times are a bit lean. This is especially helpful in holiday firms, where you can go for months with simply negligible sales.

Because of this, you need to focus on building your company credit. Improve and maintain your scores and you will have these chances. Do not, and either you do not get these business opportunities, or they will set you back you a lot more. And no entrepreneur wants that. You need to understand what affects your company credit before you can make it better.

Recession Period Financing

The number of US banks and thrifts has been decreasing gradually for a quarter of a century. This is from consolidation in the marketplace along with deregulation in the 1990s, reducing barriers to interstate banking. See: https://www.fundera.com/blog/happened-americas-small-businesses-financial-crisis-six-years-start-crisis-look-back-10-charts

Assets focused in ever‐larger financial institutions is problematic for local business owners. Big banks are a lot less likely to make small loans. Economic recessions suggest financial institutions become extra mindful with lending. The good news is, business credit does not rely upon financial institutions.

Economic Downturn Credit Score Hacks: Your Payment History is Important

Late payments will impact your small business credit score for a good seven years. You will need to pay your business debts off, as fast as possible and as fully as possible. If you are able to do so, then you can make a very real difference when it concerns your credit scores. Make certain to pay without delay and you will enjoy the rewards of punctuality.

And pay your personal debts off as fast as possible. Pay them off in full if you can. Check Hack #3 for why this is so vital.

Your payment patterns and history are a driving force in your overall credit score. Over time, paying your bills on schedule will help establish your company as one that pays their financial obligations. This will undoubtedly help push your rating up and show other business you are a low risk.

If you pay attention to none of the other credit score hacks, you will still do well to practice this one.

Learn more here and get started toward building business credit attached to your company’s EIN and not your SSN. Get money even in a recession!

Economic Downturn Credit Score Hacks: Keep Your Debt-to-Income Ratio in Check

Credit utilization rate just means the amount of cash you have on credit which is then divided by your total available credit.

The more debt you have on your plate, the more invoices you have, as well as the less disposable income you have. If your total debt approaches or surpasses your income level, then you’re probably to be seen as high-risk.

Keep your debts in check and regularly pay them off to maintain a healthy balance between what you make and what you owe.

Lenders commonly do not wish to see this exceed 30%. So for every $100 in credit, do not borrow on more than $30 of that. If this percent is rising, you’ll need to spend down. And be sure to work off your financial obligations ahead of borrowing more.

Economic Downturn Credit Score Hacks: Your Personal Credit Can Have an Effect on Your Corporate Credit

Are you having a bad business year? Then it could end up on your consumer credit score. And in case your small business has not been in existence for too long, it will directly impact your corporate credit.

Nonetheless, you can unlink the two by taking measures to split up them. Open a separate bank account just for the business. And use your business credit cards for your business only. The same is true in reverse – don’t use your personal credit to pay business expenses.

Keep this up, and the credit reporting agencies will start to treat your personal and small business credit separately.

Also, make sure to incorporate. Or at least file a DBA (doing business as) status. You can also take care of your company’s invoices with your company credit card or checking account, and make certain it is the company’s full name on the bill and not your own.

Your own personal credit is fair game when it concerns your Intelliscore Plus rating. Running a company is hard work, yet don’t let your personal finances suffer. Make certain that you remain on top of your personal monthly expenses. Stay clear of unnecessary credit inquiries. And do not compromise your personal credit for business needs.

Economic Downturn Credit Score Hacks: Credit History Length Matters

This is in essence the length of time your firm has been using business credit. Of course newer businesses will have brief credit histories. While there is not a lot you can specifically do about that, do not fret.

Credit reporting bureaus will also take a look at your personal credit score and your own history of payments. If your own personal credit is excellent, and especially if you have a fairly lengthy credit history, then your individual credit can come to the rescue of your business. That is, you did not just get your first credit card recently.

Naturally the opposite is also right– if your personal credit history is poor, then it will impact your corporate credit scores until your company and consumer credit can be split.

Economic Downturn Credit Score Hacks: The Credit Reporting Bureaus Can Get it Wrong

Irrespective of what your credit score is, it is crucial that you continue to be thorough and examine your personal and business credit reports. This can help you discover possible issues and stay informed by yourself credit profile.

Just like as each and every organization out there, credit reporting agencies like Equifax and Experian are only as good as their files. If your business’s name is like another’s, or your name is a lot like another business owner’s, there can possibly be some mistakes.

So keep an eye on those reports, and your small business report at Dun & Bradstreet, PAYDEX. Stay on top of these reports and dispute charges with documentation and clear communications. Do not just allow them to stay wrong! You can correct this!

And while you’re at, it you should also be keeping track of the credit reporting bureau which exclusively handles personal and not business credit. So that is TransUnion. If you do not know exactly how to pull a credit report, do not worry. It is easy – just Google to find the links to the CRAs.

Learn more here and get started toward building business credit attached to your company’s EIN and not your SSN. Get money even in a recession!

Economic Downturn Credit Score Hacks: Use Your Credit

Keeping your financial obligations low remains sound advice. Still, opening and responsibly making the most of company credit accounts can help you broaden your available credit and enhance your credit score.

Economic Downturn Credit Score Hacks: Monitoring Your Business Credit For Less

Know what is happening with your credit. Make sure it is being reported and address any errors ASAP. Get in the practice of taking a look at credit reports. Dig into the specifics, not just the scores.

We can help you monitor business credit at Experian and D&B for 90% less than it would cost you at the CRAs.

At Equifax, you can monitor your account at: www.equifax.com/business/business-credit-monitor-small-business.

Update Your Record

Update the data if there are errors or the details is incomplete. At D&B, you can do this at: https://iupdate.dnb.com/iUpdate/viewiUpdateHome.htm. For Experian, go here: www.experian.com/small-business/business-credit-information.jsp. So for Equifax, go here: www.equifax.com/business/small-business.

Economic Downturn Credit Score Hacks: Fix Your Business Credit

So, what’s all this monitoring for? It’s to challenge any problems in your records. You can fix mistakes in your credit reports. But the CRAs often want you to dispute in a particular way.

Get your business’s PAYDEX report at: www.dnb.com/about-us/our-data.html. Get your company’s Experian report at: www.businesscreditfacts.com/pdp.aspx?pg=SearchForm. And get your Equifax business credit report at: www.equifax.com/business/credit-information.

Disputes

Disputing credit report inaccuracies usually means you send a paper letter with copies of any proof of payment with it. These are going to be documents like receipts and cancelled checks. Never mail the original copies. Always send copies and retain the original copies.

Fixing credit report mistakes also means you specifically detail any charges you contest. Make your dispute letter as clear as possible. Be specific about the concerns with your report. Use certified mail so that you will have proof that you mailed in your dispute.

Dispute your or your small business’s Equifax report by following the directions here: www.equifax.com/small-business-faqs/#Dispute-FAQs.

You can dispute inaccuracies on your or your company’s Experian report by following the directions here: www.experian.com/small-business/business-credit-information.jsp.

And D&B wants you to dispute by phone. So their PAYDEX Customer Service contact number is here: www.dandb.com/glossary/paydex.

Learn more here and get started toward building business credit attached to your company’s EIN and not your SSN. Get money even in a recession!

Economic Downturn Credit Score Hacks: Takeaways

Hacks for your business credit score are really a fancy way of saying one thing. Be responsible. Pay your debts on time. Don’t put too much on credit. don’t neglect your personal credit. Keep your accounts open. Jump on any errors you find. Use your credit. Monitor what happens with it. Follow these suggestions and you will be well on your way to an excellent business credit score.

Beat the economic downturn! You can prosper, even now!

Once you know what impacts your small business credit score, you are that much nearer to building improved corporate credit. Learn more here and get started toward building business credit attached to your company’s EIN and not your SSN.

The COVID-19 situation is not going to last forever.

The post Beat the Economic Downturn With Credit Score Hacks Every Business Owner Should Know appeared first on Credit Suite.

How to Check Business Credit Score: Know What’s Going On

It is important to know how to check business credit score for a few reasons. First, you just need to know what is going on with your business credit. Why does it matter? Because business credit is one of many things that can affect the fundability of your business. Do you know how to check business credit score reports?

How to Check Business Credit Score: Your Fundability Will Thank You

Here’s the thing. While a lot of things affect the fundability of your business, not all the things affect it equally. Truly, there are many pieces to the puzzle. Business credit is like one big piece that fits right in the middle. As a result, you have to know how to check it to get a feel for what is happening with your fundability.

Keep your business protected with our professional business credit monitoring.

How to Check Business Credit Score: What You Need to Know

However, before we dive into how to check business credit, there are a few things you need to know. For example, there are a lot of companies that issue a credit score for your business. Next, each company offers more than one report. Lastly, these reports contain much more information than just the credit score.

Furthermore, there is no way to know which company a lender will use to check your business credit. It could be all, one, or any combination. In addition, lenders actually apply their own formula to the information in the report to calculate a score that they feel is most useful to them. As a result, they may not even use the score you see after you figure out how to check it.

Honestly, all of these things are out of your control. What you can control, to a point, is the information on the report. Like, does it contain positive information? Is the information on it accurate? See, these are things you can work with. If the information lenders are seeing is both positive and accurate, you should be in good shape. Still, you cannot do anything about the information on the reports unless you know how to check your business credit score. Then, you need to understand what it means, how it is calculated, and how lenders use it. So here we go.

How to Check Business Credit Score: Dun & Bradstreet

Basically, Dun & Bradstreet offers six different reports. For sure, the one utilized most often by lenders is the PAYDEX. Likely, this is due to the fact that it is the one most like the consumer FICO score. Similarly, it measures how quickly a company pays its debt on a scale of 1 to 100. Mostly, lenders like to see a score of 70 or higher. To put it in perspective, a score of 100 reveals the firm makes payments ahead of time. A rating of 1 shows they pay 120 days late, or more.

Together with PAYDEX, they offer the following.

Delinquency Predictor Score

This rating determines the likelihood the company will not pay, will be late paying, or will come under bankruptcy. For scoring, the range is 1 to 5, with 2 being a good score.

Financial Stress Score

As you might imagine, this is a measurement of the stress on a firm’s balance sheet. It shows the possibility of shutting down within a year. The range is 1 to 5, and a 2 is good.

Supplier Evaluation Risk Rating

In contrast, this is a ranking that predicts odds of a firm surviving one year. It ranges from 1 to 9, with a 5 being a good score.

Credit Limit Recommendation

As the name implies, this is a recommendation for the amount of debt a company can handle. Financial institutions usually use it to establish how much credit to extend.

D&B Credit Rating

This is an estimation of overall business risk on a scale of 4 to 1, where a 2 is considered good. The smaller the number the better. The rating is given in conjunction with letters, the combination of which shows a company’s net worth.

Consequently, if there isn’t enough data on a company to give it a rating, an alternative score is assigned. This is called a credit approval score. It is based on the number of employees. They will use any data they have available to calculate this alternative rating. That means, a company can control this to a point by ensuring D&B has all of the information they need.

Keep your business protected with our professional business credit monitoring.

Commercial Credit Score

Along with the PAYDEX, Dun & Bradstreet releases a commercial credit report. It has three parts. Each shows how likely the business is to default on expenses or become seriously late on payments.

Commercial Credit Score

On a range of 101 to 670, the commercial credit score anticipates the likelihood of a firm making late payments. A rating of 101 indicates it is very likely that this will happen. Likewise, a score of around 500 is good.

Commercial Credit Percentile

For this, the scale goes from 0 to 100. It shows the chance of delinquency too. However, it determines this versus other companies in the Dun & Bradstreet system. A rating of 1 is the highest possible probability versus other companies. The majority of loan providers believe a rating of 80 or higher is good.

Commercial Credit Class

Basically, this is an way of dividing businesses into classes based on the chance of delinquency. Firms in class 1 are the least likely to be overdue. Likewise, if you are in class 2, that’s great.

How to Check Business Credit Score: Experian Business Credit Scores

Experian gathers data from a lot of the same sources as Dun & Bradstreet. As a result, their reports are similar. There are a few key differences in sources, calculation, and also presentation however.

Intelliscore Plus

For example, Experian uses the Intelliscore Plus credit score. It shows statistics-based credit risk. As a result, it is a highly predictive score that can help users make well-informed credit decisions.

The Intelliscore scores range from 1 to 100, with a higher score indicating a lower risk class.

Score Range Risk Class

Low Risk	76-100
Low-Medium Risk	51-75
Medium Risk	26-50
High-Medium Risk	11-25
High Risk	1-10

Experian’s Blended Score

The blended score is a one-page report. It provides a summary of the business and its owner. A combined business-owner credit scoring model works better than a business or consumer only model. In fact, blended scores typically outperform consumer or business scores alone by 10 – 20%.

Experian Financial Stability Risk Score (FSR)

FSR predicts the potential of a business going bankrupt or not paying its debts. Consequently, this score identifies the highest risk businesses by using payment and public records. They look at a number of variables, some of which include:

high use of credit lines
severely late payments
tax liens
judgments
collection accounts
risk industries
length of time in business

How to Check Business Credit Score: The Equifax Service Credit Rating

Similarly, Equifax shows three different points on its corporate credit report. These include:

Equifax Payment Index

Similar to PAYDEX, Equifax’s payment index is a measurement on a scale of 100. It shows how many of your small business’s payments were made on time. Like the others, it uses data from both creditors and vendors. However, it’s not meant to anticipate future behavior. In fact, that is what the other two scores are for.

Equifax Credit Risk Score

This score shows the likelihood of your company becoming severely delinquent on payments. Scores range from 101 to 992 and include an evaluation of:

Available credit limit on revolving credit accounts, including credit cards
Company size
Proof of any non-financial transactions that are late or were charged off for two or more billing cycles
Length of time since the opening of the oldest financial account

Equifax Business Failure Score

Equifax’s business failure score takes a look at the risk of your business shutting down. It runs from 1,000 to 1,600 and bases its scoring on these factors:

Total balance to total current credit limit in the past three months
The amount of time since the opening of the oldest financial account
Your small business’s worst payment status on all trades in the last 24 months
Proof of any non-financial transactions (like merchant invoices) which are late or are on a charge off for two or more billing cycles

For the credit risk and the business failure scores, a rating of 0 means bankruptcy.

Equifax Scores

A positive Equifax score for your business is as follows:

Payment Index 0 to 10
Credit Risk score 892 to 992
Business Failure score 1400 to 1600

Are These the Only Agencies That Issue Business Credit Reports?

In short, no. Actually, there are a lot of other agencies that will issue a business credit score. Furthermore, part of knowing how to check business credit score is knowing which company you need to check with. These, however, are known as the big three. If you want to view your whole report, including your score, you can pay for a credit report. Since these are the most commonly used, you need one from each of them. Still, there has been an increase in the use of another option recently. It’s the FICO SBSS.

Keep your business protected with our professional business credit monitoring.

How to Check Business Credit Score: FICO SBSS?

First, the FICO SBSS is the business variation of your personal FICO credit report. However, unlike your personal FICO, the SBSS reports on a scale of 0 to 300. The higher the score the better. Still, the majority of loan providers demand a rating of least 160.

Exactly how is the FICO SBSS Scored?

Surprisingly, it is significantly different from other business credit scoring designs. For example, the SBSS utilizes your corporate credit score and individual credit rating. In addition, it makes use of monetary details like business assets and income. As you can see, the goal is to give an overall financial picture with one rating.

Business owners cannot access their FICO SBSS by themselves. There is a proprietary formula for score computations. FICO does not make that information public. The result is, you go into lending institutions blind as to what your FICO SBSS credit rating might be.

Furthermore, lenders can choose how certain factors are weighted in the computation of your score. This means your FICO SBSS could actually be different from one lender to the next. For example, one lender could put more weight on your business payment history, while another could lean more on your personal credit score.

What does all of this mean? It means that you actually cannot check your business credit score from FICO SBSS yourself. The best you can do is handle your credit responsibly and make sure the other aspects of fundability are in order. If all you put out there going forward is positive information, your FICO SBSS should follow suit and be positive as anything negative drops off over time.

How to Check Business Credit Score: Credit Monitoring

If you want to know how to check business credit score on an ongoing basis, credit monitoring is the answer. Typically, you can check your score at any time with a credit monitoring service. Each of the big three has one, but you certainly save money with a third-party business credit monitoring option. Also, you may be able to see your scores from more than one agency in one place.

How to Check Business Credit Score: What’s Important

Honestly, you have to know how to check business credit score. However, even more importantly, you need to know how it is calculated, what it tells lenders, and how to fix it if it isn’t good. Generally, high scores result in easier approval. So, if you do not have a high score, pay for a copy of your report and figure out why. Then, have mistakes corrected. If the probably is payment history, then start now paying your obligations on-time, regularly.

Of course, if you have yet to set up your business as an entity separate from you as the owner, then you likely don’t even have an actual business credit report. That’s right. Most likely everything is simply being reporting to your personal credit report. If you and your business share contact information and a bank account, and if you are not incorporated, this is likely the case. Get those things taken care of, and then you’ll be able to start the process of building business credit.

The post How to Check Business Credit Score: Know What’s Going On appeared first on Credit Suite.

SBSS Score and Fundability: When Two Worlds Collide

You already know your credit scores, both personal and business, affect fundability. But did you know that there is one business credit score that uses not only both business and personal credit history, but other information as well. It gives lenders a much broader picture when it comes to fundability. You need to understand how your SBSS score can affect the fundability of your business.

How your SBSS Score Fits into Fundability

There are many factors to consider when it comes to small business financing. You need your credit in order, you have to have complete financial statements, and beyond that there are many other things that affect the fundability of your business.

The business credit score is what often causes issues. Sometimes the business credit score is bad, but just as often it is nonexistent. No credit score is pretty much the same as a bad credit score. That isn’t the end of the story for most borrowers however. This is why the FICO SBSS has become so popular.

Keep your business protected with our professional business credit monitoring.

SBSS Score: What Is It?

The FICO SBSS is the business version of your personal FICO credit score. It is becoming more common for lenders to use this score, rather than the Experian business credit score or even the D&B PAYDEX. It stands for FICO Liquid Credit Small Business Scoring Service.

Unlike your personal FICO, the SBSS reports on a scale of 0 to 300. The higher the score the better. But most lenders demand a score of at least 160.

SBSS Score: How Is It Calculated

The scoring model for this score is very different than other business credit scoring models. Honestly, it actually gives a better picture of overall fundability in some ways. This is because it uses your business and personal credit scores. Also, financial information like business assets and revenue come into play. The point of the SBSS sore is to give a picture of total fundability in one score.

Business owners cannot access this score themselves. The formula for calculations is proprietary and well-guarded by FICO. They do not make the information public. When you go to a lender, you go in blind about what your score may be. In contrast, with the other credit agencies you can actually get a copy of your credit report and know where you stand.

The reason this does not work the same way is surprising to many. The truth is, you could have a different score from lender to lender. This is because of how lenders request your score.

SBSS Score: How Lenders Get Your Score

The process starts when you turn in your application. It will include all the financial information the lender requires. Then the lender will process the information and send it to FICO with a request for your SBSS score. At this point, the lender can ask for certain factors in the score to carry more weight than others. For example, they can put more weight on your personal credit than your business credit. They could choose to weigh annual revenue as more important than payment history. It is their choice. This is why your FICO business score could vary between lenders.

SBSS Score: What Does FICO Do with the Request?

First, they get the request from the lender. They then search business credit information from business CRAs. These include D&B, Experian, and Equifax. If they cannot pull enough scoring information from one, they move onto the next. If there is not enough data from any of them, then it uses personal credit and business financials only.

With the lender’s weighting preferences, personal credit, business credit, and business financial data, they calculate the score. The information is specific to that lender.

Who Uses the SBSS Score?

These days, the SBSS score is becoming more and more popular among lenders that lend to businesses. It is more comprehensive and complete than the other scoring models. This is because it considers more than past payment information from the business.

Lenders know that there is more to fundability than credit score alone. With SBSS, FICO does the work of piecing together the whole picture for them. This isn’t always a bad thing, unless you are counting on your bad personal credit not being an issue when applying for a business loan. In fact, it can actually help you if you have no business credit. Other than the fact that the highest score possible with no business credit is 140. That is far below the 160 most lenders require.

For now, you need to know that many lenders use this score, and the number is growing. In addition, the Small Business Administration uses it as a pre-screener for its popular 7 (a) loans. The SBA does not itself lend money, but rather it backs certain loans through select lenders. It sets a minimum SBSS score of 140 to be eligible for a 7(a) loan.

That means if you want this type of loan, you must have a minimum SBSS of 140 before you are even eligible to apply. It is possible to get this type of loan with a score above 140 but lower than the typically required 160. The backing of the SBA reduces the lender’s risk.

FICO SBSS and Overall Fundability

While this score gives a more complete picture of overall fundability than other business credit scores, it still doesn’t necessarily tell the whole story. Here is how each element of fundability comes into play for your SBSS score.

Business Credit Reports

These are the credit reports, much like your consumer credit report, that detail the credit history of your business. It is a tool to help lenders determine how credit worthy your business is.

These come from a number of agencies, but the main three are Dun & Bradstreet, Experian, Equifax. FICO searches business credit information from these agencies when compiling your score for SBSS. That means, you need to ensure your information with these companies is as complete and accurate as possible. Business credit monitoring is essential. Another key point here is to ensure your business is set up to be fundable in the first place. If not, there won’t be a lot for FICO to get from these agencies anyway.

Keep your business protected with our professional business credit monitoring.

Other Business Data Agencies

In addition to the business credit reporting agencies that directly calculate and issue credit reports, there are other business data agencies that affect those reports indirectly. Two examples of this are LexisNexis and The Small Business Finance Exchange. These two agencies gather data from a variety of sources, including public records. This means they could even have access to information relating to automobile accidents and liens. While you may not be able to access or change the data these agencies have on your business, you can ensure that any new information they receive is positive. Enough positive information can help counteract any negative information from the past.

Since these agencies indirectly affect reports that FICO uses when calculating your SBSS score, they make a difference.

Identification Numbers

In addition to the EIN, there are identifying numbers that go along with your business credit reports. You need to be aware that these numbers exist. Some of them are simply assigned by the agency, like the Experian BIN. One, however, you have to apply to get. It is absolutely necessary that you do this.

Dun & Bradstreet is the largest and most commonly used business credit reporting agency. Every credit file in their database has a D-U-N-S number. To get a D-U-N-S number, you have to apply for one through the D&B website. If you don’t have a score with D&B, you might as well not have a business credit score. As already mentioned, FICO uses D&B information as well as information from other business credit agencies.

Business Credit History

Your credit history is the crux of what makes up your business credit score, and your business credit score is a big part of your score from FICO SBSS, though how much it matters depends on how the lender requests it be weighted.

Your credit history consists of a number of things including:

How many accounts are reporting payments?
How long have you had each account?
What type of accounts are they?
How much credit are you using on each account versus how much is available?
Are you making your payments on these accounts consistently on-time?

The more accounts you have reporting on-time payments, the stronger your credit score will be.

Business Information

On the surface, it seems obvious that all of your business information should be the same across the board everywhere you use it. However, when you start changing things up like adding a business phone number and address or incorporating, you may find that some things slip through the cracks.

This is a problem because a ton of loan applications are turned down each year due to fraud concerns simply because things do not match up. Maybe your business licenses have your personal address but now you have a business address. You have to change it. Perhaps some of your credit accounts have a slightly different name or a different phone number listed than what is on your loan application. Do your insurances all have the correct information? Monitoring is key for this factor as well.

This is one of those elements of fundability that lenders may use in conjunction with a credit score. It doesn’t necessarily affect the score itself, but if can definitely affect whether or not you get approval.

Financial Statements

While the FICO formula is proprietary, many sources state that, if available, information from financial statements is used in the calculation of your SBSS score. This encompasses a broad spectrum of things. First, there is the obvious. Both your personal and business tax returns need to be in order. Not only that, but you need to be paying your taxes, both business and personal.

Regardless of whether they are used in the calculation of the score however, the information on these statements definitely affects your fundability.

Bureaus

There are several other agencies that hold information related to your personal finances that you need to know about. The data these bureaus hold affects fundability.

Take ChexSystems for example. In the simplest terms, they keep up with bad check activity that affects your bank score. If you have too many bad checks, you will not be able to open a bank account. That will cause serious fundability issues.

For this point, everything comes into play. Have you ever been convicted of a crime? Do you have a bankruptcy or short sell on your record? How about liens or UCC filings? All of this can and will play into the fundability of your business.

While these factors are unlikely to figure into your FICO SBSS directly, they do, along with your credit score, affect fundability.

Keep your business protected with our professional business credit monitoring.

Personal Credit History

Your personal credit score from Experian, Equifax, and Transunion definitely directly affect your SBSS score. If there is a problem somewhere, get to work on it. The number one way to get a strong personal credit score or improve a weak one is to make payments consistently on time.

Also, make sure you monitor your personal credit regularly to ensure mistakes are corrected and that there are no fraudulent accounts being reported.

The Application Process

The loan application process itself can affect fundability also. First, consider the timing of the application. Is there any part of overall fundability you need to work on before you apply? Next, ensure that your business name, business address, and ownership status are all verifiable. Lenders will check this. Lastly, make sure you choose the right lending product for your business and your needs. Do you need a traditional loan or a line of credit? Would a working capital loan or expansion loan work best for your needs? If you are applying for a product that won’t serve your purpose, it doesn’t matter if you get it or not.

SBSS Score: It’s a Mystery

The fact is, you do not and cannot know what your score from FICO SBSS will be. There are too many variables in play. What you can do though, is get a good overall idea of your fundability based on what you know about the factors that affect it. Once you have this, you can be sure your score from FICO SBSS will reflect it accurately.

The post SBSS Score and Fundability: When Two Worlds Collide appeared first on Credit Suite.

Everything You Need to Know About Your Experian Business Credit Score

Experian is one of the big three credit reporting agencies. Equifax and Dun & Bradstreet are the other two. In fact, Experian keeps business credit profiles on 99.9% of all American companies. Furthermore, it boasts the most in-depth information on small and midsize businesses. Knowing this, it is easy to see why your Experian business credit score is important.

Your Experian Business Credit Score: How to Start It, Build It, and Keep It Strong

Obviously, the score is important. As a result, it is necessary to know how Experian gets their data on your business. How do they calculate your Experian business credit score? What does their report tell lenders? More than that, can you improve your score if it isn’t great?

Keep your business protected with our professional business credit monitoring.

How to Start Your Experian Business Credit Score

According to Experian, all their information comes from third parties. This means you cannot add any information to your company credit profile. That said, you can still review your report for mistakes.

You still have to ensure your business is set up properly. If it isn’t, third parties will not recognize your company as a business. You have to establish your business as an entity separate from yourself. Otherwise, your business transactions will get mixed up with personal transactions. They may show up on your personal credit report. This will cause a huge tangle of a mess.

To separate your business from yourself, make sure your business has the following.

EIN
Separate contact information
A dedicated business account
Also, you have to formally incorporate

Experian business Credit Score: Intelliscore

You have to set up your business to be separate from yourself so your business accounts will report to the business CRAs. With Experian, the main business credit score and report is the Intelliscore Plus. Along with your Experian business credit score, the report contains the following:

Identifying Information

First, there is the standard identifying information. This includes company name and address, in addition to any ownership information. This part also lists important personnel and the type of company you have. Time in business, number of employees, and the amount of yearly sales are also in this section.

Payment Information at a Glance

After this, there is a section that lists how delinquent payments are, along with how many days late they are. It also provides an overall trend. For example, the lowest and highest balance for the past six months. Current balance is also shown. So it shows the credit limit available to your business. And this is how the report gives an idea of the credit utilization rate for your company.

In addition, this part lists the number of tradelines your business holds. It also includes how many times a company has checked your credit and any UCC filings.

It also shows the percent of businesses doing worse than yours as well. The number of bankruptcies, liens, and judgments are in this section too.

Credit Summary

The credit summary shows your business’s Experian credit score. Also, it links to information on what goes into the score and tips on the best ways to improve it.

Payment Summary

Next, you see the payment summary. There are line graphs for monthly and quarterly payment trends. Conveniently, it also shows where the numbers come from. There is even a graph that shows the monthly payment trend in relation to the what is average for the industry.

Below this, there are three bar charts showing payment trends for the past 6 months. This is as reported from the tradelines.

Trade Payment Information

The next part is about how your business has done with its payments, broken down by type of account.

Inquiries

Next up are inquiries into your small business’s credit. The list names companies making inquiries and the month the inquiry was made.

Collection Filings

If your company has any collection filings, the listing is here by date. It includes collection agency name, status, amounts, and the close date, if appropriate.

Collections Summary

The summary is relatively self-explanatory. It is just below the collection filings portion.

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Commercial Banking, Insurance, Leasing

Here, Experian lists all the data it has on your business relationships. Specifically, this includes relationships with insurance, commercial banking, and leasing companies. For example, how much credit was extended? When did the loan start? What is the remaining balance, if any?

Judgment Filings

Next is the report on legal information. It includes the court where a judgment was filed, the date, and how much it was for.

Tax Lien Filings

Tax lien filing information is similar to judgment filings. The only difference is there is a listing for a filing location instead of court.

UCC Filings

In this section you will see the following information related to UCC filings:

Date
filing number
jurisdiction
name of the secured party
activity on the filing.

UCC Filings Summary

Just beneath is the UCC filings summary, broken down by filing period and type of filing.

Business Owner Profile

Experian will also include an entrepreneur profile for smaller companies. The purpose is to show the relationships between you, the person, and your business. This automatically links the credit history of more than 5 million business owners to their business credit report.

It makes it much easier for your creditors to access your personal credit. This aids them in determining your overall creditworthiness. That’s important. It means that you can do the work to establish separate business credit. But your personal credit still matters. But this is in some cases.

Experian Business Credit Score: Intelliscore

The Intelliscore Plus credit score is a credit-risk evaluation based on statistics. The goal is to help businesses, investors, and prospective lenders make decisions about creditworthiness.

It’s similar to how lenders use your personal credit score. Before they decide to lend money to you, they check your credit score. The Intelliscore Plus can provide an idea of the credit risk associated with a specific business.

Intelliscore Plus Credit Score Range

The scores range from 1 to 100. The higher your score, the lower your risk class. Alternatively, the lower your score, the higher your risk class. The chart below describes each range and what it means to lenders.

Score Range Risk Class

76 – 100 Low

51 – 752 Low – Medium

26 – 503 Medium

11 – 254 High – Medium

1 – 105 High

How Is an Intelliscore Plus Credit Score Calculated?

In the credit world, Intelliscore Plus is one of the best tools for predicting risk. One reason is that they identify key factors that show how likely a business is to pay their debt.

There are over 800 of these factors. However, they can all fit into the following general categories.

Payment History

Not surprisingly, this is how well you are making payments. It includes the number of times your accounts become delinquent. It also shows the percent of accounts that are currently late. Your overall trade balance is listed too.

Frequency

Frequency refers to the amount of times your accounts have been sent to collections. It includes the number of liens and judgments you may have. Any bankruptcies related to your business or personal accounts also show up here.

In addition, frequency has to do with your payment patterns. Were you regularly slow or late with payment? Did you start off paying bills late but get better over time?

Financial

This specific factor focuses on how you use credit. For example, how much of your available credit is currently in use? Do you have a high ratio of delinquent balances in relation to your credit limits?

If you are about to start a business or are somewhat new to this game, the list above may seem a bit overwhelming. But what if your business is not yet in operation? Or you do not have a long history of business transactions? Then how will they rate you?

In this case, a blended model is used to establish your score. That means they consider your personal consumer credit score with your business’s credit score.

Other Experian Reports

Experian offers a number of other products as well. These include reports designed to help you as the owner monitor your business credit.

Business Credit Advantage Plan

This one is currently $149 monthly and contains mobile-friendly alerts and score improvement tips.

Profile Plus Report

This report is currently priced at $49.95. It features comprehensive financial payment data and predictive information on payment behavior.

Credit Score Report

This is the least expensive of the reports, currently priced at $39.95. Basically, it includes comprehensive business and credit information. Also, there is a summary of financial payment data.

Valuation Report

This report sells for $99 right now. It shows the value of your company and contains Key Performance Indicators. Additionally, it shows your business’s fair market value.

Keep your business protected with our professional business credit monitoring.

Premium Corporate Profiles

Experian also furnishes premium corporate profiles at an addition cost. The enhanced profiles contain even more detail including:

Sales figures
size
contact details
products and operations
credit summary
any Uniform Commercial Code (UCC) filings
fake business names
payment and collections history

This is in addition to the data supplied in their basic corporate profiles. They also have information on credit inquiries made in the past nine months.

Credit Alerts

Not surprisingly, you can subscribe to business credit alerts. Experian’s Business Credit Advantage program serves as a self-monitoring service. You get unlimited access to your business’s business credit report and score. You can make use of this tool for proactively handling your business credit. Alerts are sent for:

Company address changes
Changes in your business credit score
Credit inquiries on your business profile
Newly-opened credit tradelines
Any USS filings
Collection filings and
Any public record filings, for example, liens, bankruptcies, and judgments

There are ways to monitor your Experian business credit score for a fraction of the cost. Be sure to do your research.

How Do You Improve Your Experian Business Credit Score?

If your Experian business credit score isn’t the best, there are a few things you can do to improve it. It takes time, but it is possible.

Make On-Time Payments Consistently

Paying your bills on time will help establish your small business as one that meets financial obligations. This will eventually help push your score up. As a result, lenders will view your business as low risk.

Use the Credit

Keep your debt low. That’s good advice. Still, opening business credit accounts can help raise your credit score. The key is to use all credit responsibly.

Keep Your Personal Credit in Check

By now, you’re aware that your personal credit is fair game when it comes to your Intelliscore Plus score. Running a business is hard work. However, don’t let your personal finances suffer. See to it you stay on top of your personal debt. Steer clear of credit checks that are not necessary. Basically, do not compromise your personal credit for business needs.

Your Experian Business Credit Score is Vital to Funding Approval, But There is More

Your credit score from all of the business credit reporting agencies is important. Each one can affect your ability to get funding. One isn’t more important than the other. This is because you never know which agency a lender may use.

However, credit score isn’t the only thing that matters. Business credit scores are just one piece of overall business fundability. There is so much more to it. Fundability as a whole is much more complicated than just business credit. The bigger picture is just as important.

What makes up this bigger picture? There are a number of things that go into fundability. For example, you have to have all of the licenses necessary to run your business. In addition, there has to be consistency in your business information across all platforms. Of course, your business has to be set up to be fundable as well. All of this and more comes together to form the complete fundability of your business. Are you wondering if your business is fundable? Take a minute and do an analysis of fundability and see what you find out.

The post Everything You Need to Know About Your Experian Business Credit Score appeared first on Credit Suite.

Monitor Your Credit Score at D&B, Experian, and Equifax

While there are a number of other business credit reporting agencies out there, D&B, Experian, and Equifax are known as the big three. Not surprisingly, they are the largest and most commonly used. As such, their reports have an influence on lenders when it comes to making lending decisions. This means that it is vital to your business to monitor your credit score with these companies. How do you do that? What does your score even mean? What else are the reports telling lenders?

Monitor Your Credit Score and Understand What It is Telling Lenders

Your business needs funding to survive. Of course, your business credit score plays a huge role in the fundability of your business. If you do not understand your score and the rest of the report however, you can’t do anything about it. You have to know what reports the CRAs are showing lenders, what is on them, and how they are used. To do this, you have to monitor your credit score.

Check out our best webinar with its trustworthy list of seven vendors to help you build business credit.

Monitor Your Credit Score: Dun & Bradstreet

Dun & Bradstreet offers a number of business credit reports. In fact, there are six in all. Each contains varying information that is meant to alert lenders to your creditworthiness, or lack thereof.

The PAYDEX is the report lenders use most often. Likely, this is because it is most similar to the consumer FICO. It measures payment history on a scale of 1 to 100. A 70 or higher is acceptable. For context, a score of 100 shows payments are made in advance. A score of 1 indicates that they are 120 day, or more, past due.

The other Dun & Bradstreet Credit Reports include:

Dun and Bradstreet Delinquency Predictor Score

The delinquency predictor score measures how likely it is that the company will not pay,

will be late paying, or will fall into bankruptcy. On a scale of 1 to 5, a 2 is good.

Financial Stress Score

As you might imagine, the financial stress score measures pressure on the balance sheet. As a result, it shows how likely the company is to shut down within 12 months. These scores range from 5 to 1, and a score of 2 is good.

Supplier Evaluation Risk Rating

This one ranks the odds of a company surviving for a year. The minimum score is a 9 and the

maximum is 1. A good score is 5.

Credit Limit Recommendation

As its name indicates, this is a recommendation that reflects a business’s borrowing capacity. Even more, it is a guide for how much debt a company can handle. Typically, creditors use this to

determine how much credit to extend.

D&B Credit Rating

This is a rating that ranks business risk on a scale of one to four. A score of 2 is good. The rating is

given in conjunction with letters, the combination of which indicate a company’s net worth.

Monitor Your Business Credit: Experian Commercial

Experian uses what it calls Intelliscore for its ranking. This involves more than 800 unique factors combined to predict a company’s credit risk. With Intelliscore, a score of 76 or higher indicates a low risk of default. If a score falls between 51 to 75, it shows a low to medium risk. Scores from 26 to 50 are medium risk. Lastly, from 25 down to 1 is medium high to high risk.

Experian offers a number of other scores including:

Intelliscore Plus

The Intelliscore Plus is a predictive percentile score that indicates the likelihood that a business will be seriously delinquent, or have a major financial issue, in the next year.

It uses more even more factors to calculate a score than the original Intelliscore. Payment history still accounts for 5 to 10%. However, current payment status, trade balances, and percent of accounts delinquent make up 50 to 60% of the score. Credit utilization, company profile, age of the business, industry risk, and public records account for the rest. Public records include:

liens
judgements
collections
bankruptcies
other derogatory items

Data comes from suppliers, lenders, legal filings, collection agencies, credit card companies, and of course public records.

The Experian Financial Stability Risk Score (FSR)

This predicts the potential of a business defaulting on its obligations or going bankrupt. The score identifies high risk businesses using public records. These records include high use of credit lines, severely delinquent payments, tax liens, judgments, collection accounts, risk industries, length of time in business, etc.

Experian’s Blended Score

This is a one pager that provides a quick look at the business and its owner. A combined business-owner credit scoring model is more comprehensive than a business only or consumer only model. Blended scores have been found to outperform consumer or business alone by 10 – 20%.

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Monitor Your Credit Score: Equifax Business

Equifax business combines financial data with industry trade data, and then adds in utility and telephone payment data. They also use public records information.

Credit scores from Equifax Business include:

The Small Business Credit Risk Score for Suppliers

This ranks on a scale 1 to 100, with 90+ indicating that a business has paid its obligations as agreed. An 80 to 89 means they are 1 to 30 days past due, 60 to 79 indicates they are 31-60 days overdue, and a score of 40 to 59 is 61 to 90 days past the date the payment was due. In the same way, score simply decrease further from this point.

Business Failure Risk Score

This score indicates the chance of a company paying its bills late on the following scale:

497 – 816: 25% or less chance of payment being late
452 – 496: 26 – 50% chance of late payment
415 – 451: 51 – 74% chance of late payments

101 – 414: 75 – 100% chance of late payments

Public Records Report

The purpose of this report is to list bankruptcies, judgments, and liens along with the amount, date of the most recent filing, and how they were satisfied.

Credit Usage Report

This is a pie chart that gives a visual of your company’s credit usage. It is a way to see in picture form what percent of your available credit you are using. That is known as your credit utilization ratio, and it has a pretty big impact on your overall credit score.

Credit Report Summary

The summary report shows the number of your business’s credit accounts, as well as the date each one became active. It also lists any amounts past due, along with your most severe status of the past 24 months.

The highest amount of credit extended, the median balance, and the average open balance are also included.

Additionally, the report lists recent activity such as number of new accounts opened recently, delinquent accounts, number of updated accounts, and inquiries.

Financial Account Highlights

This report shows details for the past 36 months, including credit accounts and leases. It lists the status, open and close dates, and original and current credit limits. It also shows any past due amount for each. In addition, the payment amount and frequency for each account, as well as its security status can be seen.

Monitor Your Credit Score: How Can You See Your Reports?

Now that you know what reports each of the big three offers, you need to know how to see what yours are telling lenders about your business. That’s the whole reason you monitor your business credit. It can help you get an idea of the fundability of your business. Unfortunately, you cannot get a free copy of your business credit reports like you can with your personal credit reports. It costs money to monitor your business credit as a general rule.

For example, the big three charge close to $50 or more for each report:

Dun & Bradstreet reports range in price from $61 to $229 per report.
Experian reports are $49.95 per report.
Equifax is $99.95 per report.

However, you can monitor your credit with D&B and Experian at a fraction of these costs by going to https://www.creditsuite.com/monitoring/.

Knowing this, there are some one-time options for seeing at least some of the information on some of your credit reports for free. These typically come in the form of a free trial.

Monitor Your Credit: See Your Credit Report for Free

The only real way to get a free copy of your credit report is if you are denied a loan based on your business credit. Of course, this is not a fun way to see your business credit reports for free. After denial, you will receive a letter in the mail from the agency that provided the lender with your report. You will have the opportunity to request a free copy of the report that the lender saw, so that you can see why the result was a denial. You have 90 days to submit your request.

In addition to business loan denial, there are a few other options.

Nav

Nav is a service that will let you see a summary of your credit reports from all three of the major credit reporting agencies. However, these are only summaries, not full reports. Generally, that means you can see your score, and maybe the accounts you have listed. While this will help you see where you stand, it will not suffice for the purpose of correcting mistakes or even to show you what you need to do to improve your score. You do have the option to pay for more information though.

Credit.net

While Credit.net does not offer ongoing free business credit reports, you can access a free trial. There is no credit card required, and after you pull the report, you have 30 days to check it out. This means at least once you can get a totally free look at your report, because there is no fear of missing a cancellation deadline and having to pay anyway.

Scorely

This is a lesser known credit reporting agency that will let you see your credit report for free before you pay for an ongoing subscription. Unlike Nav or Credit.net, they actually calculate their own score similar to the big 3 (Experian, Equifax, and Dun & Bradstreet.) They strive to be totally transparent and to make their reports easy to understand.

Monitor Your Credit Score: What Can You Do About It?

First, if your business score contains mistakes, you can dispute them. Then, you can have the mistakes taken off. It needs to be in writing directly to the credit reporting agency. In addition, you will need to include backup documentation that supports your argument. Do not send originals however. Instead, send copies.

In contrast, if there are no mistakes but your credit is still lacking, start now making payments on time. Furthermore, ask telephone and utility accounts to report your on time payments to the CRAs. They are not required to, but some will if you ask. Additionally, ask your landlord to report your rent payments. Also, work with starter vendors that will offer net 30 invoices without a credit check and that will report your payments. Go here to find a few to start with.

Most importantly, pay your bills on time. This is the number one way to increase your business credit score.

Check out our best webinar with its trustworthy list of seven vendors to help you build business credit.

Monitor Your Credit Score: The More You Know the More You Grow

You can’t know how to fix a problem until you know the problem exists. This is why it is important to monitor your credit score. Once you know your score and whatever else your reports say about your business, you can figure out what to do about it. Knowing is half the battle.

Once you know what information lenders are seeing about your business, you can take action that will help you become more fundable. Maybe you need to get more diligent about making payments on time. Perhaps you need to dispute mistakes or add accounts. Regardless, you will have no clue what you need to do if you do not monitor your credit. By keeping an eye on things, you can be sure your business has access to the funding it needs to grow and thrive.

The post Monitor Your Credit Score at D&B, Experian, and Equifax appeared first on Credit Suite.

Save Your Bank Credit Score and Get Business Financing

Business financing is a challenge for many businesses. Don’t make it harder to get business financing with a bad bank credit score. We show you how to fix it.

Business Financing Can Be a Challenge If You Damage Your Bank Credit Score

Of course you want business financing. Every business owner does. But there’s a little-known number called a bank credit rating. And it may be making it harder for you to get money.

Your Bank Credit Rating – What’s it All About?

Did you know there are many ways you can ravage your bank credit rating? It is, regrettably, rather simple to run a power saw through your bank rating.

However prior to going any further, do you understand the distinction between bank credit ratings and company credit?

Company credit is the full and complete amount of money that your company can get from all types of creditors. That means the banking system, credit unions, credit card companies, and renting companies. And it also means providers, under what’s called trade credit or vendor credit or trade lines. That is, the vendor credit tier.

A bank credit score, on the other hand, is a measure of the sum total of borrowing capability which a company can get from the banking system only.

Bank Credit Ratings Explained

A company can get more company credit rapidly, so long as it has at the very least one financial institution reference and an average daily account balance of at the very least $10,000 for the most recent three month period. This setup will generate a bank credit score of a Low-5. So this means it is an Adjusted Debt Balance of from $5,000 to $30,000.

A lower score, like a High-4, or balance of $7,000 to $9,999 will not instantly turn down the small business’s loan application. Nonetheless, it will slow down the approval process.

What is a Bank Rating?

A bank rating is a measure of the average minimum balance as maintained in a business bank account over a three month long period. Thus a $10,000 balance| will rank as a Low-5, a $5,000 balance will rank as a Mid-4. So a $999 balance will rate as a High-3, and so on.

A company’s principal objective ought to always be to maintain a minimum Low-5 bank score (or, an average $10,000 balance) for at the very least three months. This is because, without at least a Low-5 rating, most banks will operate under the presumption that the business has little to no ability to repay a loan or a business line of credit.

However there is one thing to keep in mind: you will never really see this number. The financial institution will just keep this number in its back pocket.

The Bank Score Ranges

The numbers work out to the following ranges:

To get a High-5 score, your company will need to have an account balance of $70,000 to $99,999. For a Mid-5 rating, your company has to have an account balance of $40,000 to $69,999. And for a Low-5 score, your company has to keep an account balance of $10,000 to $39,000. So your business needs this level bank score or better so as to get a bank loan.

For a High-4 rating, your company needs to have an account balance of $7,000 to $9,999. And for a Mid-4 rating, your business must have an account balance of $4,000 to $6,999. So for a Low-4 rating, your business will need to have an account balance of $1,000 to $3,999.

Ruining Your Bank Score

And now, without further ado, below are 7 ways you can leave your bank score in tatters.

1st Way to Ruin Your Bank Credit and Miss Out on Business Financing

Banks are extremely motivated to lend to a company with regular deposits. And a business owner must also make regular deposits in order to maintain a positive bank score. The business owner must make several consistent deposits, more than the withdrawals they are making, in order to have and preserve a great bank rating. If they can do that, then they will have a great bank credit score.

Consistency is the hobgoblin of little minds, right? So be a free spirit!

2nd Way to Destroy Your Bank Credit

Do not let your company show a positive cash flow. The money coming in and leaving your firm’s bank account should reflect a positive free cash flow.

A positive free cash flow is the quantity of income left over after a firm has paid all of its expenses. According to Investopedia, it “represents the cash a company can generate after required investment to maintain or expand its asset base. It is a measurement of a company’s financial performance and health.”

When an account shows a positive cash flow it shows your small business is generating more income than is used to run the business. That means the bank will feel your company can pay its bills.

So if you truly want to damage your bank score, purchase whatever’s expensive for your small business so your expenditures outstrip your profits. Doesn’t every manufacturing facility deserve plush carpeting in the loading dock?

Check out our professional research on bank ratings, the little-known reason why you will – or won’t – get a get a bank loan for your business.

3rd Way to Damage Your Bank Credit Score and Miss Out on Business Financing

To add to #4, do not include overdraft protection to your bank account as soon as possible, to avoid NSFs. Why bother thinking ahead or planning for the future? Everything is going to be excellent forever, right?

Writing checks insufficient funds (NSFs) is a sure way to ruin your bank rating.

4th Way to Damage Your Bank Credit Score

Never handle your bank account responsibly. This means that your small business ought to not avoid writing non-sufficient funds (NSF) checks at all costs, because those annihilate bank scores. Non-sufficient-funds checks are something which no small business can afford to let happen.

Balancing checkbooks and accounts is so boring anyway. You’ve got adequate cash without even making sure, right?

5th Way to Ruin Your Bank Credit Score and Miss Out on Business Financing

To go along with #6, do not make certain that each and every credit bureau and trade credit vendor likewise lists the business name and address the precise same way. This is every keeper of financial records, revenue and sales taxes, web addresses and e-mail addresses, directory assistance, etc.

No lending institution is going to stop to consider the myriad manners in which a business may be listed, when they check out the business’s creditworthiness. Thus if they are not able to discover what they require easily, they will either deny an application or it won’t be reported to a business credit reporting agency such as Experian, Equifax or Dun & Bradstreet.

Therefore, if they are unable to discover what they need conveniently, they will just deny the application. So see to it your documents are a mess!

6th Way to Damage Your Bank Credit

Don’t bother to guarantee that your business bank accounts are reported precisely the same way as every one of your business documents are, and also with the precise same physical address (no post office box) and phone number. Sow confusion in this area by changing one and not another, or not remedying an error if there is one.

Check out our professional research on bank ratings, the little-known reason why you will – or won’t – get a get a bank loan for your business.

7th Way to Ruin Your Bank Credit Rating and Miss Out on Business Financing

Don’t maintain a minimum balance for a minimum of three months. Since every bank rating cycle is based on the previous three months, a consistently seesawing balance should damage your bank score.

Destroy Your Business’s Bank Score – Although You Will Never See It

You, the entrepreneur must never make consistent deposits. And these deposits must never be more than the withdrawals you are making, in order to destroy your bank credit rating.

If you can do these things, then your business will have a horrible bank credit score. And, consequently, a bad bank credit rating means your firm is far less likely to get business loans.

Just Kidding: Of Course We Don’t Truly Want You to Ruin Your Business’s Bank Credit Rating!

So, where do you go from here?

The 1st Great Way to Rescue Your Bank Credit Score and Get Business Financing

Maybe the simplest way to achieve and maintain a good bank credit score is to deposit at least $10,000 into your business bank account and maintain it there for as long as a half year. While you will still need to make consistent deposits, this one easy step will help in three ways. One, you will have kept a good minimum balance for at the very least three months. Two, you will more than likely not overdraw with such a good balance. And 3, you will be at the magic minimum for a Low-5 bank credit score. Therefore you will be dealing with our #4 and #7, above.

And you might even be able to get around our #3. Yet we still highly recommend overdraft protection.

The 2nd Wonderful Way to Rescue Your Bank Credit Rating and Get Business Financing

A 2nd requirement is to ensure your small business account information are consistent across the board, all over. While it might take some work order to make sure everything is right, you will be dealing with our #5 as well as #6, above.

The 3rd Great Way to Rescue Your Bank Credit Score and Get Business Financing

A third requirement is to make consistent deposits, as well as make certain they are greater than the quantities you are taking out every month. This will take care of our #1 as well as #2 smoothly.

Make it Easier to Get Business Financing With a Great Bank Credit Score: Takeaways

Your bank score is not to be trifled with. Although the financial institutions maintain a secret concerning them, failing to keep your bank credit rating high will make it a whole lot harder to do well in business.

Check out our professional research on bank ratings, the little-known reason why you will – or won’t – get a get a bank loan for your business.

The post Save Your Bank Credit Score and Get Business Financing appeared first on Credit Suite.