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How business credit inquiries impact scores

Updated: Feb 3, 2022

Small business owners are sometimes reluctant to open new accounts with suppliers or apply for business funding because they are concerned about how those inquiries can impact their scores and ratings. Little do they realize that inquiries may actually prove beneficial when working to build or boost credibility.

D&B defines inquiries as requests received from companies, agencies or other sources to access your business credit file, broken down by industry and the depth of the data requested, and then segmented into a specific time frame, usually a 12-24 month span.

Any time your business applies for credit or opens a new vendor account, there is a high probability that the creditor or supplier will check your business credit report. If your company has established a credit profile with one or more of the major corporate credit bureaus, an inquiry will be generated.

Unlike personal credit reporting which allows you to see the name of the company pulling your credit report, corporate credit bureaus track and identify these inquiries by industry, and they are not required to release the name of the requester to you.

For the most part, inquiries are a normal part of doing business and help validate your business information, strengths, needs and viability. Inquiries tell D&B that other companies are viewing your report and are interested in doing business with you or extending your company credit. If the information you provided during the new account creation or application matches what's already in the credit profile, it verifies existing data is still up-to-date and may add to your creditworthiness.

Some inquiries, especially those that are trade-based, may bring a slight positive boost to your company's ratings. These inquiries tell D&B that you get your materials, services, products and supplies from a variety of resources, meaning that your success or failure is less dependent on just one supplier.

However, excessive inquiries over a very brief time, or those coming from specific industries that are finance-based, may signify your company could be the victim of identity theft, is seeking risky or fraudulent credit or is suddenly experiencing financial distress. If these inquiries become suspect, D&B may raise your risk ratings, downgrade your creditworthiness, or issue "information alerts" to your existing or potential creditors.

Normal and infrequent inquiries won't impact your business credit scores and ratings the same way inquiries on your personal credit can weigh down your FICO score, but it's wise to only establish new accounts with suppliers you plan to use right away. One common mistake small business owners make is to create several new accounts at once and then not use them right away, which can look suspicious and undo all the good you've accomplished.

— By far, the most substantial benefit that comes from inquiries actually comes later, after you've made a purchase and paid your bill, because an inquiry also establishes a permanent link between your company and the creditor or supplier who pulled your report, insuring a greater likelihood that future positive payment history flows seamlessly into your credit file —

Be careful, though, because negative payment history also will flow into your file just as quickly. If you monitor your business credit and watch for inquiries when opening new accounts, you'll get a better idea of which creditors are linked to your file. You want to make sure invoices from those suppliers are always paid 7-10 days before the due date.

As I work with my clients, I always try to keep a healthy mix of inquiries spread out across various industries, including a major creditor, smaller credit lines, and trade- or industry-based creditors. We work to keep inquiry levels in a moderate range until a reasonable pattern can be established to avoid any risk-flags. And I always try to add their existing payment history to the report first as a way to establish a baseline of what has already been achieved before chasing new accounts or creditors.

If you would like more information about how inquiries impact your business credit scores, ratings, and creditworthiness, or if you just need advice on getting past a current problem, give me a call at 800-918-7505 for a free credit analysis and tips to help you get your business the credit it deserves.

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