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How a Virtual Address Hurts Your Credit

Updated: Jul 26, 2023

Location. Location. Location. How many times have you heard it? But there are some credit "gurus" out there who tell their clients to use a virtual address so they look more "corporate" or professional. Unfortunately, what they don't tell their clients is that trying to pass off a virtual address or mail-drop location as a physical address can actually cause more harm than good.

When assessing your company's validity, D&B looks at seven specific data points that help to determine your company's viability and credibility:

  1. Business Name: Must match exactly to any available legal documentation and/or information flowing in from alternate trusted resources, such as credit card companies, banks, and other financial data providers.

  2. Legal Structure: Whether this is a corporation, LLC, partnership, or sole proprietorship, but also whether it is headquarters, branch, division, subsidiary, parent, or global ultimate.

  3. Physical Address: The physical location where business is conducted, whether it is a business or residential location, approximate square footage, and whether it is owned, rented, leased, or shared. Virtual offices, personal mailboxes, and mail-drop locations are not permitted, and typically are viewed as deceptive (because there's no way you have 12 employees in that mailbox!)

  4. Phone: Whether it is a landline, cellular phone, or VoIP (voice over internet protocol), and whether it is in the business name or in the name of an individual associated to the business.

  5. Principal/Title: Names of all owners, principals, partners, and directors, as well as their titles. A brief biography of ownership history and previous education and work experience is useful.

  6. Industry: This includes up to five SIC codes that best define your business overall operations. The SIC codes auto-match to the corresponding NAICS codes to determine risk factors that may be associated to a specific industry classification.

  7. Size/Strength: This is determined using either your employee count or financial data. Publicly traded companies are required to provide annual financial statements. Privately held companies are not, but they can provide their estimated, projected, or actual sale figures. If you choose to submit financials to D&B, you can do so here:

The physical location of your business is very important because it helps D&B determine more than just your company's location, but also your size, strength, and potential future need for credit or capital.

Using a virtual address can actually corrupt your corporate data and make your business appear less credible because that address has probably been associated to a lot of different people and businesses in the past, and some of them may have been fraudulent. Those addresses are already well known by D&B's team of validation experts, so you really aren't fooling anyone.

Here are three examples of how something as simple as your physical address impacts the Credit Limit Recommendations for your company:


Are you a single owner company who runs your business from a home office that used to be a two-car garage? If so, your expenses will be minimal, a phone, computer, printer, some office supplies, marketing, and probably some advertising expenses. Your address is easily verifiable, and you likely won't be impacted by outside environmental factors. Your D&B Credit Limit Recommendations are going to be low (maybe $2500 max) because your expenses and need for overhead is low.


Let's say you own a tire store and lease a 600 square foot glass-front brick-and-mortar location on Fourth Street that has three bays in the back. Your added expenses mean your need for capital is going to be much greater. Besides the fact that you need to maintain an inventory of tires, rims and accessories, you also need more phones, computers, and printers for your 22 employees, and that means more advertising, marketing, payroll, multiple types of insurances, personnel, tools, cleaning supplies, break-room supplies, etc. Your Credit Limit Recommendations are going to be higher (probably $60k to $80k) because all those expenses are going to demand you have plenty of resource capital available when you need it.


But what if you're a two-year-old start-up telecommunications company originally built over your garage, but you've now grown from 2 employees to 600 operating from 16 locations across the United States? There is no way you are going to be able to operate a major corporation on the shoestring budget you started with. In all likelihood, your garage is no longer your "corporate headquarters", and you certainly don't want each of those 16 branch locations to have to fend for themselves. By converting your original D&B file to a Headquarters report and linking all the Branch locations to that Headquarters, you can be confident that when the water delivery service pulls a credit report on your new branch #17 in Reno, they'll see the scores and ratings for the Headquarters in St Louis. By now, your Credit Limit Recommendations are probably over a million, and you need every new vendor, supplier, creditor, and investor to be able to see that.

If you are trying to build business credit,

viability, reliability, and credibility

are three key components.

Don't start off on the wrong foot by trying to misrepresent your company's viability and validity. Myths about creditors not wanting to lend to companies who operate from a residential address are just that: myths. And with all the schemes and frauds occurring these days, many vendors and suppliers won't create commercial lines of credit for — or ship product to — companies who provide a mail-drop location as their physical address.

More importantly, if your address doesn't match across all platforms — physical, shipping, billing, mailing, payment and/or banking — chances are the money you're spending with your vendors, suppliers, creditors, or lenders may NEVER get reported to your business credit report.

As always, feel free to reach out if you have any questions or need assistance. Consultations are always free, and most issues are easily resolved right over the phone. 800-918-7505 (ext 2 reaches me directly)

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