Updated: Jan 26, 2022
Too many small business owners are in the mindset that building corporate credit should be done quickly and then not given another thought. What they fail to realize is — if you build that credit correctly while you are in the process of building your business — it will continue to grow and work for you long into the future.
No matter what you do, your business requires tools. A chef needs pots, pans, and food to prepare. A car dealership needs access to vehicles, a place to sell them, and people who know what their talking about. A realtor needs properties, signs, phones, and sales professionals. But even with all these elements in place, a weak corporate reputation can keep your potential clients and customers from trusting, and keep your business from being able to succeed.
A strong corporate reputation is required in today’s tough markets — equally as important as any other tool in your chest. But if you are currently working with a company that is using shady techniques, you may find out it will cost you more to get to your goals, and could cost your business it’s reputation. You should know what is actually in store for you before you begin.
For over 175 years, Dun & Bradstreet has been in the business of measuring risk. They have made it their business to gauge your business on a standard of how it performs against other companies your age, your size, and in your industry. They have seen businesses grow and thrive while others crumble and fail. And they have learned their lessons by thwarting the efforts of those who attempt to deceive creditors and suppliers.
D&B may not always be right, and they certainly won’t always make it easy, but they have fought hard to become the standard by which all others are judged. If there is negative information in your corporate credit file, they provide options to dispute it. If there is missing information, they provide free services to correct the data. If you have vendors and suppliers who can provide verifiable payment history, they provide options for reporting that information.
If D&B sees certain red flag behaviors, they could put your credit file under investigation, downgrade your creditworthiness, or even sever your ability to get any credit at all. Their subjective algorithms and trained eyes will spot pattern behaviors that indicate risk, and they will stop it dead in its tracks. In short, they understand that a lot is riding on reputation — theirs and yours.
Starpoint Credit Solutions understands that, as well. Having once been employed by D&B, we understand the data and it’s impact on your credit reputation. We structure our strategies to meet or exceed their standards. We strive to build a solid, well-rounded corporate credit file that will continue to work for you as your business grows. We know there is no one out there who knows more about your business than you, so we work directly with you, one-on-one, to ensure the best possible picture of your business is presented.
Below, you will see what some companies may tell you about how to build corporate credit compared against what Starpoint will practice when getting you there successfully. We see where these risky strategies have gotten others. We have seen good businesses fall in waste. We hear the horror stories everyday. We don’t want you to become one…
RISKY BUSINESS – The use of shelf corporations to build credit for a company that is not functioning as an active entity. STARPOINT SAYS – Does not recommend the use of shelf corporations because it requires the business owner to provide false information that can potentially lead to federal charges of bank fraud. Use your own business. If you don’t have one, start one.
RISKY BUSINESS – Will promote the sale of CPN numbers in an effort to hide poor personal credit history. STARPOINT SAYS – Does not recommend the use of CPNs because they are a known indicator of prior disreputable activity and will eventually trace back to the user and cause legal concerns. Build up your business credit so it is not reliant on your personal.
RISKY BUSINESS – The use of virtual addresses and phone numbers to portray an active location for the business. STARPOINT SAYS – While virtual addresses certainly serve a purpose, D&B will only recognize the address where the business is actually operating from, even if that is a residential address. Use the address and phone number your business operates from.
RISKY BUSINESS – The sale of “tradelines” as a means to quickly build up a payment history and profit at the client’s expense. STARPOINT SAYS – You should start by adding your existing suppliers first, but also know that many of these so-called “tradelines” provide Net30 credit or purchasing accounts to new businesses at no charge and generally do not require the use of a personal guaranty. Add your own tradelines and open free accounts with new providers.
RISKY BUSINESS – Providing false information and/or financial statements to support a business that has had no income or expenses. STARPOINT SAYS – Do not do this. It is deceptive, fraudulent, and can cause cross-contamination of any other business you may own or be associated to in the future, not to mention will bring very costly legal issues you cannot escape. Only provide information that is verifiable and open to validation.
RISKY BUSINESS – Use of a credit “partner” to piggy-back off the solid personal credit file of another person. STARPOINT SAYS – This is extremely risky because it will permanently link your business to the practices, reputation, and credit file of someone who may have (or eventually get) a disreputable/corrupted file. We recommend you do not put your business credit file at risk this way.
LESSON: It's usually a good thing to go with your gut and not let desperation steer you to a risky path. If something sounds too good or fast or easy to be true, do your research to make sure the offer holds water.