Updated: Feb 3
Did you recently get an alert notification that someone is checking your business credit report? If so, you may have some questions about who is checking your file and what exactly they are looking for. The truth is, you may never know who is pulling your credit report, but there's a lot you can do to understand what they are looking for and what it means to your company.
What would you do differently if you wanted to put your business in the best possible position before you click "SUBMIT"!
First of all, understand that any business or individual can pull your corporate credit report, and they can do so without your permission. Unlike consumer credit, commercial credit does not require the bureau inform the business owner (or anyone else) that your corporate credit file is being viewed. And because the inquiry is deemed commercial (not bound by Fair Credit Reporting Act), the bureaus are not required to identity who is pulling your report, other than by their industry and the type of report they pulled.
In fact, many of the accounts you create online or credit applications you submit are run directly through business credit reporting software such as DNBi Risk Management or Experian's business division, where the lender or supplier has already established specific criteria your scores and ratings will have to meet in order to clear the application process.
When you click the "submit" button, the application process will automatically look for your company in the credit bureau's system, compare the data you provided to what is showing in the business credit report, check to see if your company meets the required criteria, and generate a result. If everything goes as planned, you will receive an immediate approval notification and the wheels of progress will begin spinning in your direction. But if anything doesn't jive, you'll receive one of those dreaded decline notifications or a request for more information in hopes you can still be approved later.
There are lots of companies that will check your corporate credit report.
Vendors and suppliers usually check that business data matches their files.
Potential clients may pull the credit file before making a business decision.
Contractors and sub-contractors may check your risk ratings for potential to pay slowly.
Insurance underwriters check scores and ratings to gauge what rate you will qualify for.
Credit card companies determine approval amounts and interest rates based on highest credit.
Previous or current suppliers can pull a fresh file for review at any time to see if you still meet their parameters or can qualify for a higher limit.
Government agencies can check that your company is been fully validated before authorizing further action.
Marketing divisions often run their potential leads through a pre-screening process.
Banks will check for a data match before a secured credit card is approved.
Licensing and bonding companies use the credit file to validate business principals.
Researchers and news agencies verify ownership, affiliations, and credibility.
There are several different types of reports that can be pulled.
Sales and Marketing Solution - Identifies companies that fit into the basic criteria, such as new businesses, businesses who recently earned a Paydex score, or segregating companies with full scores and ratings from those missing pertinent data.
General Data Request - Verifies the company name, address, phone, and general business information, such as what your industry is and how many employees you have.
D&B Payment Report - Usually pulled if credit is approved and a high credit limit will be established based upon the highest credit/payment history on file.
D&B Proprietary Score - Provides scoring data, and then constantly monitors the scores and alerts the creditor if any changes occur.
D&B Risk Solution - A continuous monitoring report that alerts the creditor if any changes occur to any of the risk ratings or pertinent data in the file.
Comprehensive Insight Report - Provides a full copy of the current credit profile and payment history, including all scores, ratings, ownership, corporate family, and special event notifications.
Inquiries are also broken down into categories for each of the companies reviewing the file, as sampled below. Tracking this type of data helps to differentiate between general data or solicitation requests or those from specific industries that could indicate possible fraud, delinquency, or insolvency, such as a higher than normal increase in reviews from the Finance industry.
Inquirers are typically segmented into very general classifications.
Public Administration - such as a government office, agency, or federal contractor.
Services - such as pest control, architect, contractor, or bookkeeping service.
Wholesale Trade - such as a provider of durable goods, tires, foods, parts, and supplies.
Manufacturing - such as a company that manufactures and sells computers, pulleys, windows, etc.
Transportation - such as shipping, trucking, taxi, and limousine services.
Communication - such as phone, cell, internet, and mail services.
Electric, Gas, and Sanitation - self-explanatory, but will not include municipal services.
Generally, inquiries on the business credit file don't have the same impact as they would on your personal credit and FICO score, but you still want to keep track of these corporate reviews because I can guarantee the corporate credit bureaus are watching them.
If you have a wide variety of inquiry types from a broad base of companies and industries, this indicates your businesses is growing and active on many fronts. But if the only inquiries to your credit file are creditors, lenders, and financial providers, you may see your Financial Stress Scores go through the roof — and your credit possibilities go down the drain.
No matter what type of business you have — whether you own a restaurant, install air conditioners, manufacture home goods, deliver magazines, flip houses, or consult from home — it is imperative that you take the following necessary steps to get your credit file into it's best possible position, and then keep it there as your company grows and expands.
Steps every business owner should be taking to improve their corporate credit
You must have a business credit profile established in the business name
Keep the data in your profile up-to-date and accurate at all times
Make sure your bank account data matches the name and address in your credit file
When shopping, always create an account and make purchases using the business account
Always pay for business purchases using the business checking or debit card
Set up a free business credit monitoring service and track your alert notifications
Dispute derogatory information to see if it can be removed (even if it is true)
Add positive payment history whenever you can (even small creditors help)
Apply for credit using the business name and address exactly as shown in your credit file
Keep inquiries to a minimum to avoid indicating risky behavior
Please reach out if you have any questions or would like more information about how to identify who is reviewing your corporate credit file and what they are looking for.