If you have ever purchased a car, bought a house, or applied for a credit card, the chances are strong that you’ve been asked for your personal credit score or had your personal credit report pulled. The detail contained within your personal credit may indicate your personal creditworthiness, and may help determine whether you’ll receive approval for that loan and at what interest rate.
Many might not know it, but in the business world the same kind of review process frequently takes place based on a business’ credit as opposed to the business owner’s personal credit. D&B®, a company founded in 1841 and a pioneer of business credit, helped businesses establish validity by providing the substantiation often needed to conduct business and set terms. To date, there are over 200 million unique D&B D-U-N-S® Numbers assigned to businesses worldwide.
While business credit is defined as the extension of trust through trade terms from one business entity to another, in which one party receives something of value immediately and agrees to repay the other party at a future date on agreed-upon terms, it is much more than that. Business credit helps define trust and character, fundamental indicators that may help improve risk management, access credit and capital from lenders, enter government and supplier programs, and also aid in decision-making.
Business credit is a compilation of predictive and historic scores and ratings used by many businesses to help gauge business, not individual, creditworthiness. Similar to personal credit, there are no short cuts to building strong business credit, but there are services that empower a business to establish and build its business credit scores and ratings over time by capturing and documenting business activity. The time to start building your business credit history isn’t the day you need a loan or credit terms from a new vendor, it’s now. Dun & Bradstreet Credibility Corp, a strategic partner of D&B, has a wide range of free and pay services and educational resources that can help businesses build their own business credit profile.
If leveraged properly, business credit could be beneficial to a business seeking to prove its credibility. By validating a business’s payment history, a business credit file could help offer insight into the business’ financial health and stability. When combined with other vital business data points such as size, scope, age and type of business, it may offer a more holistic picture of your business.
The reasons to focus on building positive business credit as a business owner are many, and include helping: limit personal liabilities by separating personal credit from business credit while protecting personal assets; secure better trade terms with partners enabling stronger cash flow; reduce the likelihood for a personal guarantee; and secure lower interest rates with banks. In addition, gaining entrance into numerous Fortune 500 and federal programs can often be dependent on building a strong business credit file which starts with obtaining a D&B D-U-N-S® Number, a unique nine-digit business classification assigned to each business credit listing.
It is in a business’s best interest to not only know what is in its credit report, but to monitor its credit file so it has a trusted record of business practices to show partners, lenders, and consumers.
For more information on business credit, please visit DandB.com.
Source: Dun & Bradstreet Credibility Corp.
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