Whether you run an established business or are just starting up, the benefits of actively monitoring your business credit should not be overlooked. Business credit differs from personal credit in several ways, one of which is the ability to potentially impact business credit scores beyond simply consistent, on-time payments. Additionally, high business credit scores and ratings can provide a firm base upon which running, growing, and even selling a business may be easier
The benefits of business credit:
- Financially: Business credit scores and ratings can influence how easy it is for a business to acquire funding, and can be leveraged for better payment terms from banks and suppliers. Many banks will check both personal and business credit for small businesses, so it’s wise not to let either score falter, especially when your business is still young.
- New business: One of the places potential partners, vendors, and/or suppliers may look for information on a business is its D&B® business credit profile. Many large retailers require business credit scores and ratings above a certain threshold in order to be a supplier for them.
- Credibility: In the business world, credibility is hugely important. High business credit scores and ratings can demonstrate that the business is financially stable.
- Protection: Separating personal and business credit helps protect both personal and business finances. If a business that relies solely upon the personal credit of the owner fails, the owner is personally and financially responsible for any outstanding debts. A strong business credit profile may even allow owners to escape personal guarantees.
Why Actively Monitor?
Actively monitoring business credit can help impact scores and ratings, and also manage damage control.
- For instance, businesses working to build their scores to the point where they’re eligible to apply to be a supplier to a large company probably want to know as soon as their scores reach that point.
- On the other hand, judgments, liens, or fraudulent activities can have a negative impact on business credit, so it’s imperative to deal with them as quickly and efficiently as possible. Without reviewing your business credit on a regular basis, you may find out about such developments after they’ve negatively impacted your business credit profile.
No matter the stage a business is in, it’s recommended to actively monitor its business credit profile. If you sign up for a credit-monitoring product with Dun & Bradstreet, then you will receive alert emails when your business credit scores and ratings change; however, conducting a thorough, biweekly examination of your business credit file is suggested.