Personal Credit Freezes Can Put Your Business Credit in the Cooler

Updated: Feb 4

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.