Maybe you’ve been told you need a “D&B D-U-N-S® Number” or you need to “build your business credit,” but if you’re like most new business owners just getting started, understanding how to leverage your business credit file can play second fiddle to some pretty big concerns, such as: 

  • Landing your first customer/contract
  • Signing a lease
  • Setting up your business
  • Finding an accountant
  • Invoicing

Let’s assume you’re ready to get serious about landing bigger contracts and setting your business up for long-term success. If so, then pour yourself a large cup of coffee, and let’s talk about the ten things you should know BEFORE you start building your business credit file:

1) Business credit can be complicated (dare I say “confusing”?)

  • On a few key elements, business credit operates very different than personal credit, such as: 1) there are many different scores and ratings and 2) the scores and ratings are calculated using a variety of different business related factors. We have resources to help you make sense of business credit, but that doesn’t take away from the fact that there’s a lot to learn.

2) A healthy business credit file alone won’t get you money for your business

  • While poor business credit scores and ratings can hurt your chances of getting a traditional bank loan, you’ll help improve your ability to land a loan if you have a compelling financial story, a good relationship with a banker and a healthy business credit file.

3) A healthy business credit profile won’t necessarily get you better terms on your next contract

  • As the business owner, you’re still responsible for negotiating each contract, and while you might be able to leverage a healthy business credit file to help get better terms, the impetus is on you to make it happen.

4) There’s a good chance your business already has a D&B D-U-N-S Number

  • Getting a D&B D-U-N-S Number is free, and there’s a number of business activities (many described in this video) that could prompt Dun & Bradstreet to create a D-U-N-S Number for your business.

5) The information in your business credit file has potential to do harm to your business

  • Our Credit Advisors get calls on a regular basis from business owners who are on the verge of losing a major contract because their scores and ratings have dropped. That’s no fun for anyone… and while most of the time, there’s a good reason that scores are dropping, sometimes companies have reported false information on other businesses. Either way, you can go ahead and start monitoring your D&B business credit file (for free) today using CreditSignal®. *

6) Updating company information within your business credit file is often a process

  • While we wish we could make it seamless to update information within your D&B file, fraud is a real concern in the industry and we need to have strict controls to prohibit someone from taking over another’s business credit file. The positive twist on the situation is that the friction built into changing things like addresses, company names, owners, etc, is designed to minimize opportunities for fraud.

7) Your D&B business credit file may have very little impact on the success of your business

  • For some business owners who are happy to run a micro-business in specific industries, years can go by without them ever needing a D&B D-U-N-S Number or having someone check their business credit file. Of course, for businesses that want to grow quickly, enter supplier programs, land government contracts, get access to funding, and more, a business credit file may help them, and a D-U-N-S Number can be required to apply for the contract. In most cases, when a D-U-N-S Number is requested, your business credit report will be pulled and reviewed. 

8) Expect to hear the words “it depends” often when discussing business credit

  • Will your Paydex® score go up if you manually submit a trade reference to D&B? Can you merge two business credit files under one D&B D-U-N-S Number? Can you remove a specific negative trade reference from your file?  The answer to many questions will be “it depends”; and that’s the truth. It really does depend on your business situation, the industry you’re company is in and the type of information you’re submitting. With that said, you can dispute a trade reference through the portal.

9) Business credit cards won’t necessarily improve your business credit

  • When looking to build your business credit, you’ll want to work with companies that submit your positive “trade” to Dun & Bradstreet. Curious if a company submits to Dun & Bradstreet? One way to find out is to ask the company. Some may tell you if they do, although Dun & Bradstreet does not disclose these companies.

10) Large companies often have thresholds for the scores and ratings they’ll accept into their (most often: supplier) programs

  • While many companies have thresholds, their representatives rarely disclose or publish them, so you will need to do some digging to find out if your business’s scores and ratings are good enough to make it worthwhile for you to even bother applying to those company’s small business supplier programs.

BONUS: Getting dinged for “slow pay” may occur

  • Even if your vendor knows you can only pay them when you get paid, they still might report your account as “slow pay” to Dun & Bradstreet. While a good relationship with your vendors won’t solve all problems, it can certainly help to openly communicate expectations with vendors and know their reporting expectations as well.

Did we miss something? Let us know in the comments.