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Personal Credit Freezes Can Put Your Business Credit in the Cooler

Updated: Feb 4, 2022


If you've ever placed a fraud alert or block on your personal credit report, frozen it (even temporarily) due to possible identity theft, or worked with a credit repair company to remove derogatory information you suspected (or claimed) wasn't yours, you may find that your business credit applications are in a permanent state of lock-down.

When you apply for any type of personal credit, whether its from retailers, credit cards, personal loans or auto financing, your creditors are required to perform due diligence tests to verify you are actually you, that you're not currently (or previously) the victim of identity theft, and that the information you've provided in your application matches information that is already verified by outside resources, such as credit bureaus or information retrieval services.

When you apply for business-based credit from a vendor or supplier, they have the option whether or not they want to verify personal credit information on a principal. The decision of whether a supplier wants to pull a personal credit report on a company's principal is usually dictated by the dollar value of the sale. There's hardly any value in spending $20 to pull a credit report for a $14 sale.

But if there is even the slightest possibility your business credit application's approval could render access to cash (hard currency), lenders are now required to perform certain "tests" to validate the identity of the principal whose name appears on the application. While the goal is to separate your personal CREDIT from your business, when it comes to identity verification, you don't have the option of separating your personal IDENTITY from your business.

 

Remember...

The requirement to verify your personal identity does not equate to a requirement to personally guarantee the account, credit card, or loan.

 

Since the shortest distance to any path is a straight line, the shortest and straightest line for identity verification runs through the big three personal credit bureaus: Experian, Equifax, and Transunion. If you have ever locked, blocked, or frozen your personal credit file, or have placed even a temporary fraud alert on your credit report, you may not realize that lenders and creditors may not be able to see your identity, much less verify it.

These types of barriers to verification usually elicit an immediate denial for any and all credit applications, and they can often be placed on your personal credit file without you even know it.

  • There have been some personal credit repair companies who have suggested their clients submit official affidavits falsely proclaiming identity theft even if none actually occurred.

  • Some have placed blocks or "holds" on their unsuspecting client's files while they are performing the repairs as a way to keep the client from "undoing" the progress that's been made.

  • Still others have gone so far as to complain to creditors about fraudulent charges made or accounts opened to get them removed from the files.

In all of these instances, a fraud alert or freeze will be placed on the personal credit file and, depending on the severity of the claim, may keep business credit lenders and creditors from being able to perform even the most basic cursory "soft pull" of the credit file.

When that happens, it doesn't matter how perfect your business credit scores and ratings are. YOU have just become the greatest risk to your company's capacity to succeed.

If you or anyone else has EVER placed a fraud alert or freeze on your personal credit report, you need to check your report before you start the process of applying for business credit. If a block or freeze exists, you'll need to submit documentation to each of the bureaus to request the block be removed, and that process could take 60-90 days to be completed.

If you have any questions or need one-on-one assistance to help your company achieve business credit approvals, please feel free to reach out to me directly — 800-918-7505 ext 2. Need answers right now? Connect with me now via CHAT!


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The opinions expressed on this website are those of Starpoint Credit Solutions LLC and its ownership.

All information is provided for educational and training purposes only.

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