What large companies look for in a small business credit report
A business credit report is often used as a tool for determining a company’s creditworthiness and reliability. When it comes to contracting, the scores and ratings in a business credit report can influence which company wins a bid. As a small business, you know that winning contracts can help grow your business or help keep the lights on. When you bid on contracts with large companies, big-box stores, or the government they will most likely pull your business credit report and scrutinize your scores, ratings, and other information. What are they really looking for when they examine your credit reports? Here are a few of the big things these companies pay close attention to – and that you’ll want to pay attention to as well.
1. A Positive history of business contract completion
A large company will likely want to see that you have successfully completed contracts in the past and were able to deliver on time. Not having any prior business contracts might not disqualify you, but being able to show your business can handle the demands of being a supplier or contractor could help you stand out against other bidders. Before trying to get a contract with a big-box store or the federal government, try becoming a subcontractor first to enhance your business credit report.
2. Multiple revenue streams
Some large companies would prefer that your business have other contracts secured before bringing you on as a supplier or contractor. In the event that a hiring company terminates its contract with you and you don’t have other contracts, it could be detrimental for your business. Often, companies don’t want to be responsible for the livelihood of a small or medium business, so having multiple business contracts is ideal, both for you and for companies looking to contract with you.
3. A strong financial outlook
Predictive credit scores and ratings help potential clients and partners determine what your company’s financial situation may be like down the road. The sourcing process can be tedious, so large companies don’t want to have to replace their suppliers six months or a year down the line. Having a good financial stress score and delinquency predictor score can help alleviate any worries a large company may have about your financial future.
4. Address lawsuits reported in credit reports
A business credit report also shows any suits, liens, or judgments against a company, which could be red flags for potential partners. If you have any outstanding issues, you should try to resolve them before bidding on large contracts, so that you can assure a procurement officer your business isn’t likely to harm their company’s reputation.
These are just a few of the things large companies or bank lenders may be looking at when they purchase a business credit report, but by paying attention to these areas you can set yourself up for success. Understanding everything in your business credit report and how it impacts your business can be trying, but we’re here to help. Learn how to read a business credit report or check out our business credit guide for more information.