Business Credit Isn't "Once-and-Done"
People sometimes get lulled into the misconception that once they have their scores and ratings in place they can wash their hands of the creditbuilding process and walk away, confident that they have reached the goal line. Reality couldn't be further from the truth.
Did you know that your payment history can drop off your report? Most small businesses go into the credit-building process believing that all they need to do is establish a Paydex score and they will be on their way. Then a year or so down the road, when they need their corporate credit to be in it's best possible condition, they find that all those payments they added back then have dropped off their report and their scores and ratings are no longer where they once were.
What they don't realize is that auto-reported payment history only stays on the business credit report for up to one year, and manually submitted payment history drops off after two years, which means you could lose those scores and ratings as quickly as you got them. In order for payment history to stay in your report, your supplier needs to report a 'new' transaction (purchase) has occurred since the last time they reported to the bureaus. That's not to say you have to constantly use your auto-reporting suppliers, but you do need to maintain an ongoing relationship in order for them to 'refresh' payment history from time to time.
In addition, most business owners don't realize that payment history that was previously added by a vendor or supplier who has since stopped reporting — perhaps because their contract ended or because they were red-flagged or deemed 'disreputable' — will often get stricken from the credit report without you even knowing. To add insult to injury, if you did use one of those red-flagged suppliers, your scores and ratings could suffer simply because you used them to help build your business credit in the first place (which actually happens more than people think.)
Five Ways to Build (And Maintain) Positive Payment History
1) Review your business credit report at least once per month.
Print and/or save a copy of your report every month
Compare your report to the previous month for any changes
Verify your payments are reporting the same or better
Dispute any slow payments or update data as needed
If re-reported payments show 6-12 months since last sale, reorder!
If manually submitted payments were added two years ago, resubmit!
2) Re-use your existing vendors or suppliers at least once per year
Restock the same items you previously purchased
Shop for new items your company could use at the time
This doesn't need to be a major purchase, just a new one
3) Open accounts with new suppliers as needed
Having alternative suppliers in the same industry is beneficial
Look for local or national suppliers who are listed with the bureaus
Watch to see if your recent purchase get auto-reported to your file
4) Don't turn your back on companies who don't offer Net 30 accounts
Be willing to prepay for online purchases to help build vendor confidence
Many prepaid purchases get reported to the bureaus as COD accounts
Don't be afraid to ask a company if they will report to the bureaus
5) Add any new or existing payment history to your report
Non-autoreporting payments can be manually submitted and added to your file
Ask your existing suppliers if they are willing to report to the bureaus
Use D&B's Creditbuilder (monthly) to submit new suppliers for verification
Use Experian's Business Credit Advantage (annual) to submit suppliers for verification
Track any new payment history as it gets added to your file
Print and/or save a copy of the report anytime there are changes
If all of this seems like a lot of work when you have better things to focus on, you might consider hiring Starpoint Credit Solutions to take care of it for you. We track changes to our client's data, payment history, scores and ratings on a daily basis and keep them up-to-date on any changes as they occur. That gives them the freedom to run their business while we make sure their business credit is ready for them when you need it.