How to Easily Obtain An Excellent Business Credit Score By. Carlos Callahan

High Business Credit Scores Are a Must For Your Business – Learn How to Hack Your Way to Higher Scores

Having access to money and credit for your business ultimately determines your business’s success or failure, per the SBA. But unfortunately, according to Enterprenuer.com, 90% of business owners know nothing about business credit, and ironically about 90% of businesses in the United States that open will end up failing and closing their doors for good.

Having a good business credit profile and score can mean the difference between you having a prosperous business, or helming a sinking ship. You need money and credit to grow, especially to grow into a highly successful business. This is actually one commonality all successful business have: they all have established business credit.

Facebook, Microsoft, Apple, and every highly successful private and public company has business credit. This means the business can use its own credit profile to grow, without the owner or CEO providing their personal credit or liability to secure that credit. For example, Walmart gets 80% of their total cash injection from business credit alone. This is one of the reasons they have grown into one of the largest retailers in the world.

But what about your business? Do you have business credit established now? Are you able to go out right now and get high-limit retail and cash credit cards for your business? If not, then you need to improve your business credit scores.

Business credit is credit that gotten in a business’s name. With business credit, the business builds its own credit profile and credit score. With an established credit profile and score, the business will then qualify for credit. This credit is based on

17 Business Credit Score Hacks

the business’s ability to pay, not the business owner’s. Since the business qualifies for the credit, in some cases there is no personal guarantee required from the business owner.

There are a ton of benefits that business credit provides, including that a credit profile can be built for a business, completely separate from the business owner’s personal credit profile. This gives business owners double the borrowing power as they can have both personal and business credit profiles.

Business credit scores are nearly completely based on if the business pays its bills on time. A business owner can get credit much faster using their business credit profile versus their personal credit profile. Approval limits are much higher on business accounts versus personal accounts, which is yet another benefit. Per the SBA, credit limits on business credit cards are usually 10 – 100 times higher than for consumer credit.

When done correctly, business credit can be built without a personal guarantee. You can get it quickly, regardless of personal credit quality. And business credit doesn’t report to the consumer credit reporting agencies. So it won’t show up on your personal credit report. Therefore, as you get new business credit and use it, your scores won’t dramatically decrease as with consumer credit.

Plus you can get most business credit without the owner taking on personal liability, or providing a personal guarantee. This means in case of default; the business owner’s personal assets can’t be pursued.

Even though most don’t know this, when a business owner applies for financing, their personal credit is reviewed. Not having business credit established will get an owner less financing. There are no regulations that require the lenders notify the business owner for their reason for denial, so most never know.

17 Business Credit Score Hacks

But when business credit is built, the business can use its credit to qualify for retail credit cards. The business can also qualify for credit lines and loans.

But first – you need good business credit scores. Here are 17 proven hacks to raise yours.

Hack #1. Get Your D-U-N-S Number From Dun & Bradstreet

To hack and improve your business credit score, you first need to get set up with the business credit reporting agencies. Go to D&B’s website and look for your business dnb.com/dunsnumber. Can’t find it? Then get a free D-U-N-S number. A D-UN-S number is how D&B gets your company into their system, to generate a PAYDEX score.

A D-U-N-S number plus three payment experiences leads to a PAYDEX score Once you are in D&B’s system, search Equifax and Experian’s sites for your business.

Hack #2. Give Your Business Financials to D&B

When looking at your business credit reports, consider D&B’s Composite Credit Appraisal. This number runs 1 through 4 , and it reflects D&B’s overall rating of a business’s creditworthiness

They analyze financial information, public records, company payments, business age, and more.

If a company does not provide current financial information, they cannot get a rating of better than a 2

1R and 2R Rating categories show company size only based on the total number of employees They are assigned if a company ’s file does not contain a current financial statement Employee Range (ER) Ratings apply to certain lines of business

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17

Business Credit Score Hacks

As a result, it pays to hand over your business’s financial information so Dun & Bradstreet will have something to go on when they calculate this score.

Hack #3. Get Your BIN from Experian

Another vital ID number is the BIN number from Experian. BIN stands for Business Identification Number.

Experian’s BizSource assigns the BIN for any business. It stays the same even with changing ownership and locations. Similar to a DUNS number from Dun & Bradstreet, it allows for consistent tracking over time. If there are multiple BINs assigned for some reason, they can combine into one business view to show the overall creditworthiness of the single company.

Experian’s TrueSearch technology combines variations of the business name and address into one record. Since it tracks variations over time, its matching technology provides depth of data and a more complete credit profile and score that has not previously been available from Experian. Regardless of the variation entered into the search, it will match up to the current record.

Having a BIN will keep your records connected, even if your business adds a new owner, moves, or even changes industries.

Hack #4. Get Three or More Accounts Reporting to D&B

To get a PAYDEX score, a business needs at least three trade accounts reporting to their file. It can take up to 90 days for those trades to report and a score to be established.

But how can you get accounts that report? Check out the next hack to find out.

Hack #5. Get Accounts that Report to One or More of the Business Credit Reporting Agencies

To get business credit, your company needs to have payment experiences with companies which report to the business CRAs. The easiest way to get this done is to start with what’s called vendor credit.

Vendor credit consists of true starter vendors. They will extend credit when other businesses won’t, so they are a lot less frustrating to work with.

Get a reported payment experience from three accounts that report and your business will get a PAYDEX score.

Hack #6. Pay Your Invoices Early

Get the most favorable funding by paying all bills on time. This results in a PAYDEX score of 80, and an Equifax Credit Risk Score of 90 or better. A good FICO SBSS score will be driven (in part) by on-time payments and business credit history. For Experian, historical behavior (payment history) accounts for 5 – 10% of total score.

And keep in mind, for SBA loans, you won’t be approved with a FICO SBSS score under 140. But the typical cutoff can be as high as 160. Below that, you will probably be denied due to being too high a risk. Chances are good the SBA lender won’t even submit your application to SBA if your score doesn’t meet the threshold.

How well does your company pay its outstanding invoices? How has your business’s payment performance changed over time?

Wait to pay your bill until you have been billed. We have seen many times clients try to pay before they have been sent the invoice/bill and then the account doesn’t report. And then the vendor tells them it is because they paid it too early.

There is a direct correlation between the day you pay your business’s bills and your business credit score.

Hack #7. Keep Any Outstanding Balances Low

Hand in hand with paying on time or even early, lower balances will make that more likely to happen.

Consider, too, that in part, Experian’s Intelliscore is based on any open and outstanding balances you may have.

Balances can also go directly to utilization – more on that later.

Hack #8. Add Utility and Telco Payment Data if Possible

Positive payment experience reporting matters, particularly when you are first building business credit. When it comes to utility payments, often these bills are reported to Dun & Bradstreet, etc., but only when they go into collections. But with alternative credit, an entrepreneur has a fighting chance of demonstrating responsibility and reaping the benefits of good payment habits, versus only suffering if he or she has shown a poor payment performance.

Plus there’s a connection between alternative credit, FICO, and inclusivity. According to FICO, 92% of consumers have cell phones, but just 5% of consumers have telco data in traditional personal credit bureau files. And of the about 80 million US adults living in rental housing, just 1.8 million (2.3%) have a rental trade line reported in their traditional credit file. Adding these kinds of payment experiences can generate FICO scores for people who currently don’t have them.

Personal credit is a part of the calculation of your FICO SBSS score, so it helps to keep your personal credit scores high.

17 Business Credit Score Hacks

However, there are privacy considerations with alternative credit. Data about short-term loans (payday loans) and utility payments may lead to more adverse outcomes for some, especially in disadvantaged communities. It could serve to perpetuate discrimination. See: fastcompany.com/90318224/now-wantedby-equifax-and-other-credit-bureaus-your-alternative-data.

Hack #9. Update all CRA Records and Add Any Missing Information

Check your business credit reports regularly. Is information incomplete, or missing altogether? Always update your records with all of the CRAs when there are changes. These kinds of changes can be in ownership, overall number of employees, business entity (corporation, LLC, etc.), locations, and new addresses.

Even if you change your phone number, tell the business CRAs. Probably the easiest way to remember to do this is to set a quarterly calendar reminder and pass along changes and updates regularly.

Hack #10. Avoid Bankruptcies and Liens

Current collections, liens, judgments, bankruptcies or other derogatory public records can all lower business credit scores.

Consider the D&B Financial Stress Score Percentile. These score ranges from 1 to 100. 1 percentile is most likely to fail. 100 percentile is least likely to fail. This number is a comparison to other businesses.

A financially stressed company means: a company ceased operations following assignment of bankruptcy or a company voluntarily withdrew from business operation with unpaid obligations or a company closed up shop with a loss to creditors or a company is in receivership or reorganization, or a company

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made some sort of an arrangement for the benefit of creditors.

Finally stressed companies, of course, are the most likely to fail. While it’s not impossible to recover from a business bankruptcy, don’t make things harder for your business.

Hack #11. Avoid UCC Filings and Blanket Liens

When your company borrows money, a UCC filing starts when your company agrees to pledge certain assets to a lender. Once the parties all sign the agreement, the lender is then free to file a UCC lien against those assets.

The lender files what is called a UCC-1 financing statement with the Secretary of State. This act creates the lien. However, these liens come on a first come, first served basis. So if two separate lenders try to take out a lien on the same piece of property (such as an expensive piece of equipment or a building), the first filer will get priority. This matters if your company defaults on paying back your business loan or your business files for bankruptcy protection. Otherwise, the asset in question could be seized, or foreclosed on, or sold, such as at auction.

These financing statements are a matter of public record, and they protect creditors, who can easily run a search for any outstanding UCC-1 liens. Many states offer these searches online for reasonable fees.

Your business can borrow from more than one lender, so long as the specific collateral in question is different for each UCC1 financing statement. These specific collateral liens are more common when the loan is for a special purpose like inventory financing or purchasing equipment.

A UCC-1 is active for five years. It must be renewed by the lender if the term of the loan goes for longer than that. The lender can also file updates to the UCC-1 in case the asset changes in any manner.

Typical Assets Subject to UCC-1 Liens

Businesses have specific needs and assets, but UCC-1 liens tend to be filed on receivables, office equipment, real estate, investment securities, inventory, vehicles, larger operating equipment, letters of credit, and commercial instruments. These are often promissory notes or drafts.

A creditor can also get what’s called a blanket assignment. A blanket assignment allows for a legal transfer of the ownership of your business’s present and future accounts receivable, to act as loan collateral. This means the creditor has a security interest in every single one of your business’s assets. These kinds of liens are more common for traditional bank loans, alternative business loans, and loans from the Small Business Administration

Protect Your Assets

For borrowers like your business, a UCC-1 can be helpful. But you need to be vigilant, particularly because UCC forms do not require your signature. Lenders do not always cancel the lien once the debt is paid off. Plus the existence of a lien can delay other forms of financing or even cause it to be denied.

It can take up to 1 – 6 weeks for an old lien to be terminated. So be sure to act fast to preserve your rights and make future financing easier and more likely. You terminate the lien through use of a UCC-3 form. This form also allows for amendments to UCC-1 financing statements.

What Happens if You Default?

As always, the usual cautions about taking on too much short term debt apply to your business just like they do to you. You may be putting a lot of pressure on your sales team, or gambling on a product taking off or even a new style of clothing.

17 Business Credit Score Hacks

In the event of a default, every asset covered by the UCC-1 lien can be seized by your creditors. Blanket liens require a court judgment against you. Judgments, of course, are a matter of public record, searchable by any possible future lenders. Plus Uniform Commercial Code filings stay on your Experian report for five years.

Hack #12. Avoid Lawsuits by Keeping Your Workplace Safe and Honoring Contractual Obligations

You can’t prevent every lawsuit. But if your business always honors its contracts and obligations, that will go a long way to staying out of court.

The other legal issue is accidents. Keep work places clean and obstruction-free. Get a risk assessment done by your insurer. They’re in the business of loss prevention, and you should be, too. Preventing work place accidents just might lower your workers’ compensation premiums as well.

Hack #13. Keep Accounts Out of Collections

Consider Experian’s Intelliscore Plus score. It is based on payment history, but many other factors tie into percentages of overall score.

Historical Behavior (payment history) makes up 5 – 10% of the total score. Current payment status, trade balances, and percent of accounts delinquent account for 50 - 60% of score makeup. Credit utilization is 10 - 15% of total score.

The company profile, age of business, industry risk, and size of business assessed by number of employees make up 5 –10% of the total score. And 10 – 15% of the total score is based on derogatory items, e. g. collections, liens, judgments, and bankruptcies.

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Besides, collections data stays on your Experian report for six years + nine months. Not to mention that any accounts which go into collections will drag down your PAYDEX.

Hack #14. Avoid Hard Credit Inquiries on Your Personal Credit

An increase in the number of hard personal credit inquiries or applications generated by the business owner can lower personal credit scores, and, therefore your Experian credit scores.

Hard inquiries happen when you apply for credit. But soft credit pulls don’t bring your scores down. A soft pull happens when, for example, you check your credit.

Hack #15. Keep Personal Credit Utilization Low

Your credit utilization rate is a simple math problem. It’s the total amount of available credit, divided by the amount of credit in use. Keep it below 30% – better, below 25% – and this hack will help raise your business credit scores.

Credit issuers want to see you’re using your credit, but maintaining it wisely. They monitor these stats when making approval decisions. Responsibly managing personal credit utilization will help you raise your Experian business credit scores.

Hack #16. Keep Debts Low and Don't Overspend

This means retaining enough assets to cover business downturns. It means not overspending. It means not taking on more debt than your company can handle. D&B in particular looks at chances a company will go bankrupt within a set time period. So take steps to keep your business’s finances out of the red.

©️2021 The Distributor of this e-Book, all rights reserved. No reproduction or use of any portion of the content or work or the entire work is permitted without the express written permission and authorization of the publisher. However the publisher of these materials routinely grants authorization for reproduction or use of this work, in whole or in part. If you would like to use any portion of this material in a book, article, e-zine, newsletter, radio, or television broadcast, podcast or in any other seminar teleconference or other events or publications please email or call the distributor of this guide.

17 Business Credit Score Hacks

These good financial habits link to your PAYDEX and Experian business credit scores. Developing a responsible and good payment record can help raise both scores.

Hack #17. Increase Your Most Recent High Credit Used

Credit issuers determine how high a credit limit to issue, based on how much you spend monthly and how recently you’ve spent it. Balance this hack with the hacks concerning keeping lower balances and holding down utilization. If you spend more and can’t pay it back, then this hack can hurt your business credit. So exercise caution here.

Bonus

Hack #18.

Use Your Credit Often

Use your credit often, so you can get more credit with every approval.

Develop payment experiences for your business. This means using your credit or financing. And of course it means paying everything back, on time, and in full, every single time.

Bonus

Hack

#19. Monitor Your Business Credit

You will never know what’s going on with your business, unless you check. But you’re often too busy to check. Monitoring makes that easy. We make it affordable.

Save 90% over what Experian and Dun & Bradstreet charge. Instead of $149/month for D&B $149 and $50/month for Experian, get access to both for only $24.

Bonus Hack #20. Dispute Errors on Your Business Credit Reports

Negative payment history can hamper your ability to get loans and credit cards. It can increase the rates and payments on the credit and loans you do get. Know which accounts are reporting adverse credit history. Then you can work with the CRAs and credit issuers to correct inaccuracies and add more positive history to offset the negative.

You Can Hack Your Way to Excellent Business Credit Scores

Always use credit responsibly! Never borrow more than what you can pay back. Keep track of balances and deadlines for repayments. Paying off punctually and fully will do more to raise business credit scores than about anything else.

Growing business credit pays off. Good business credit scores help a business get loans. Your lender knows the small business can pay its financial obligations. They recognize the company is bona fide.

The company's EIN attaches to high scores and lenders won't feel the need to require a personal guarantee.

Business credit is an asset which can help your business in years to come. Hack into its power.