How to Open a Business Credit File

As a business owner, it’s crucial to improve your company’s ability to acquire credit and funding. A business credit file is every bit as important as your personal credit file. Like personal credit, business credit determines whether your company can be trusted by the way it manages its finances. Think of your business credit file as a barometer for the financial reputation of your business.

Your business credit file is created by business credit reporting agencies. These agencies are storehouses of collected business and credit information on millions of companies in the United States and throughout the world. The most widely recognized agencies are Dun & Bradstreet® and Equifax® Small Business.

The first step prior to opening a credit file is establishing your business entity. Next, you will need to obtain an employer identification number also known as your EIN or federal tax identification number. Now that these two fundamental steps are completed the third step is to open a business credit file with each of the major agencies.

Now it’s important to understand each business credit reporting agency gathers information about a business through various sources such as payment data from banks and lenders, UCC filings, incorporation filings, business registrations, internet web mining, print and online directories, trade reporters, etc.

Through these data collection methods, a business credit agency may have created a credit file on your company without your knowledge.

So, prior to opening a credit file with a business credit agency it’s essential to conduct a company search with each agency to determine if your business already has a file in its database. To conduct a search, visit each agency’s website and type in your company name, city and state in the search box provided.

If your company is listed in the search results then order a business credit report so you can review the information being reported on your company. Check for any inaccuracies. and if If there is any incorrect information contact the credit agency directly. Another option is to submit a dispute and/or update online.

If your business is not listed, one of the ways to open a business credit file is if a is to have a supplier or lender that your company has credit with, reports your payment history to a business credit agency. Consider working with suppliers that issue credit to your business and report it because this will open your business credit file and begin establishing your company’s credit rating.

If a supplier or lender does not report, you can encourage them to report by becoming a trade reporter with an agency. Keep in mind not all suppliers report to business credit reporting agencies. In fact, of the more than 500, 000 suppliers extending credit, only about 10, 000 reports to a business credit agency.

Another way to open a business credit file with a business credit agency is applying for a D-U-N-S® Number. Dun & Bradstreet is one of the major agencies that issues a D-U-N-S® Number which is linked to a company’s credit file. By applying for a D&B number you are in fact registering with a business credit agency.

The most important thing to remember is your company’s credit file will be incomplete until it has payment experiences reporting. It’s essential that suppliers, vendors, retailers, lenders, banks, leasing companies and other businesses that your company has payment history with shares the data with a business credit agency.

Credit savvy business owners always focus on establishing the creditworthiness of their businesses. What’s in a business credit file impacts whether a company may get approved for business credit or a loan and at what interest rate and payment terms. With a strong business credit file, a company will position itself to get the best rates, terms, and credit limits.