Dispute Inaccuracies on Your Business Credit Reports
The first step to cleaning up your business credit is to dispute inaccuracies on your business credit report. This is important to do because often companies and even business credit bureaus make mistakes.
Here’s how to dispute inaccuracies on your business credit reports:
- Pull a copy of your business credit report from each major credit reporting agency (Dun & Bradstreet, Experian Business, and Equifax Small Business).
- Review each report and highlight each inaccuracy. Check for how things are spelled, that the industry code is correct, dates align, trade lines are being reported accurately, and everything else looks correct.
- Provide proof of the inaccuracies. You may have to contact vendors and even photocopy invoices and other financial statements to prove your case.
- Mail, email, or fax back the highlighted reports and proof to the business credit bureaus to fix. It will usually take 30 days for these changes to reflect; however, Experian has a help portal on their website where changes can be made immediately.
Important: Privacy laws protect personal credit; however, business credit is not protected, and anyone can gain access to your business information.
Select Vendors That Report Regularly to Business Credit Bureaus
The next step to repair your business credit is to select vendors that regularly report on-time payments to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Small Business). This is important because it will help build your business’s credit score, making it easier for you to build back up your business credit.
Here are some vendors that regularly report to the major business credit bureaus:
- Uline.com (shipping supplies and useful equipment)
- They report to Experian and Dun & Bradstreet but your order must be higher than $50 for them to report it.
- Quill.com (office, cleaning, and packaging supplies)
- They may require a $100 prepaid order before they will extend a net 30, but in any case you'll need to have a Dun & Bradstreet PAYDEX score established. For them to report, you'll need to place a $500 or higher purchase. To qualify you will also need a website with a custom email address.
- Grainger.com (industrial supplies like hardware, power tools, pumps, etc.)
- Reports to Dun & Bradstreet but will require that you are in good standing with the Secretary of State.
Here are some additional net 30 starter vendors to consider (n.b., prerequisites are that you have filed with the Secretary of State, have a D-U-N-S number, and that your business phone number is listed in the 411 directory):
Apply for a Business Credit Card
One of the easiest ways to build your business credit score is to apply for a business credit card. These revolving lines of business credit can substantially help your business credit improve as they carry a lot of weight on your credit reports.
Here is how to apply for a business credit card:
- Find the right credit card for your business. Different cards offer different incentives, rewards, and terms — do your due diligence to determine the best card for your business needs.
- Fill out the business credit card application (you can usually fill this out online).
- Get approved. If applying online or over the phone, you may get instant approval, otherwise you may have to wait for an approval letter in the mail.
- Activate your card and begin using it. Remember to keep your card balance below 30% of your credit line.
Important: When applying for a business credit card, it may be required to run a personal credit check, resulting in a hard credit inquiry. This can drop your personal credit score a couple of points, but it should bounce back within a couple of months.
Keep Revolving Credit Account Balances Below 30% Utilization
A mistake many business owners make is maxing out their credit. The rule of thumb is to only spend up to 30% of your revolving credit line. Following this rule will reflect better on your credit report, increasing your credit score.
Here are some tips to help maintain a 30% utilization ratio:
- Have multiple lines of credit - more than one business credit card will ensure you can budget for this 30% utilization better.
- Ask for higher credit limits - the larger the line of credit you have, the higher the dollar value of the 30%.
- Monitor your spending - the biggest reason business owners spend more than 30% is because they mismanage their credit accounts, keep an eye on them constantly.
- Know where the 30% mark is - the formula for calculating 30% is account debt divided by credit limit (then multiply by 100).
Negotiate to Remove Negative Marks on Your Business Credit Report
Contact all vendors who have reported negative marks against your business credit and see if you can work something out with them to get them to remove the negative marks. This applies to both vendors you currently have and those who you’ve done business with in the past.
Here are some guidelines to help you:
- Ask if you make six months’ payments on time if the creditor will take off the previous six months of negative marks. Tell them you’re trying to repair your business credit, and they may wish to help).
- Contact old creditors and see what you can do to get them to remove the previous marks that have stained your credit. You may have to place an order with them, or you may get lucky, and they’ll just willingly help you.
- Write letters to the business credit bureaus and fight the negative marks. Credit bureaus will often remove marks against you if you prove your case.
- When negotiating with creditors that you’ve wronged in the past, express how sorry you are and how you want to make things right with them. They are more likely to help you this way.