Establishing good business credit scores and ratings can be crucial to gaining the trust of both financial institutions and other businesses. However, it is equally important for small-business owners to maintain their hard-won business credit scores and ratings.
A reduction in your company’s business credit scores and ratings may affect the terms of bank loans and business partnerships. According to a 2012 study by the National Small Business Association, 20% of respondents who had been denied a loan were told an unfavorable business credit score was to blame.
There are actions you can take to help repair your business credit scores and ratings, both on your own and with the help of Dun & Bradstreet's Concierge team.
Submit Trade References* to D&B
A trade reference is a record of a payment experience as reported by a vendor or supplier to D&B. It’s composed of seven base variables that aim to paint a picture of a firm’s creditworthiness. Among these factors are the current amount owed to a supplier, past-due payments, and the date of the report. Businesses that check your D&B business credit report may see results informed by trade references.
Submitting trade references to D&B for acceptance and approval may help you rebuild your business credit file. There are several tools to help you manage this process from do-it-yourself to do-it-for-you. No matter how you submit your trade references, D&B will need to verify the details you provide. As such, you should focus on submitting references from qualified suppliers most likely to respond to inquiries.
Make On-time Payments
Past-due payments can negatively affect your business credit scores and ratings and sour relationships with vendors. Making on-time payments – especially to trade references – can be an important part of rebuilding business credit. Paying your debts in a timely manner can help demonstrate a record of financial responsibility, which may help you repair your business credit scores and ratings.
If you’re unable to pay off all your debts in a timely manner, consider starting with the largest invoices. The D&B PAYDEX® Score is dollar-weighted, for example, so you may be able to limit damage to your business credit file if you first cover the costliest debts owed to trade references.
Businesses that continue to struggle to make on-time payments should consider reaching out to creditors and attempting to arrange more favorable terms.
Rebuilding your business credit file can be a complex process, and business owners should consider tracking the effectiveness of the steps they take to help rectify the situation.
There are subscription-based services that alert you to changes to the scores and ratings in your business credit file, and can be valuable tools to track both positive and negative developments as you seek to repair your business credit file.
Earning favorable business credit scores and ratings is not an easy task. Responsible spending, timely bill payments, and knowing your scores and ratings can help put you on the path to restoring your business’s creditworthiness.
*Trade References will be added subject to D&B® verification and acceptance. Please see http://www. dandb.com/glossary/trade-references/ for eligibility, process and other information regarding Trade References.