The Importance of Checking Your Business Credit Report

If you’re not applying for business loans or new credit, you might be tempted to overlook your business credit score for the time being. That’s not a great idea, though. Your credit report is a useful tool for managing risk, and monitoring it can help you get ahead of embezzlement or other financial fraud issues. It can also take a long time to bring a score back up if it dips, and watching your credit score can help you see if you’ve overlooked a payment and had an account go delinquent, so it helps you stay ready for your next round of financing so you can apply with confidence when you do need credit again. That’s on top of the benefit that comes from following up quickly if a payment does slip by, which can help you preserve important business relationships.

Fraud Monitoring With a Credit Report

Getting regular reports about your company’s credit activity means being able to see any unauthorized borrowing or missed payments right away. That’s important if you’re concerned about financial fraud, including embezzling by employees or partners. Frequently, fraud within companies is perpetrated by diverting funds from a payment temporarily or by opening credit in the business’s name and then drawing on it for personal use. Both of these are easier to spot if you’re regularly reviewing a document that lists your recent missed payments and outstanding debts, so you can start investigating the issue sooner. If you have partners or employees in a trusted financial position within your organization, consider using your credit monitoring as a risk management tool.

The Importance of Maintaining a Credit Score

Business credit scores are a bit opaque compared to consumer scores, and many owners of small companies report that once they lose ground, it takes a while to bring that number back up. This is partially due to the fact that business loans are a bit more stringent about income and down payment levels than consumer borrowing tends to be. It’s also due to the fact that many of your regular overhead expenses don’t contribute to your credit report. Often, utility companies and suppliers only report delinquent payments if they report at all. Requesting a service provider report to the credit bureaus when you make on-time payments can help you build or rebuild a score more quickly. Not every supplier or vendor you deal with will be willing to do the extra work, but if even a few say yes, you’ve gained some help with your goal of a stronger credit report.

SHARE IT: LinkedIn