Building trust is an essential part of any stable business relationship. Whether you want to connect with a potential client, vendor, or landlord, you need a way to demonstrate your trustworthiness and convey the value of your business. A business credit file can effectively demonstrate your business’s reliability and make your business more attractive to potential partners. In addition, a strong business credit file can help differentiate you from businesses that don’t have a way to prove their credibility.
Credibility means that vendors can trust you to pay them for supplies, customers can trust you to deliver product on time and as ordered, and partners can trust you to fulfill your contracts. Good business credit scores and ratings can help demonstrate that credibility, which can help pave the way to everything from better terms on your office lease to better odds of winning big contracts.
Many people associate business credit with applying for a business loan or line of credit. In a survey of finance professionals completed by Dun & Bradstreet, credit reports ranked as one of the most common tools finance leaders use to manage risk, with 51% of respondents using them to make decisions about if and how to work with other businesses. But it’s important to note that building and maintaining a strong business credit file can have many additional benefits beyond helping to improve the odds of getting a loan.
For example, your business credit scores and ratings can help you negotiate higher trade credit limits from suppliers, lower premiums from insurance companies, and more favorable terms on equipment and real estate leases. Your business credit scores and ratings may qualify you to bid on lucrative contracts with nationwide retailers and government agencies. They may also come in handy in a pinch to keep your cash flow steady, such as when you need to obtain payroll credit or apply for assistance in an emergency.
Building and maintaining business credit is an ongoing responsibility, but when done correctly, the advantages to your business can far outweigh the effort. The tips below will help you leverage your credit report to boost your business’s reputation.
Tip 1: Add your financial statements to your credit profile.
Submitting your financial statements to credit agencies can demonstrate a history of financial responsibility, especially if you do not have a long history of borrowing from banks or suppliers. Showing these financial statements increases transparency and lets others know that they are dealing with an ethical and financially sound business, which can go a long way toward building trust. And as you begin to build strong business relationships, you will be able to broaden the scope of your credit report with other kinds of information, such as references from suppliers and payment experiences with leasing companies.
Tip 2: Pay your bills on time or early.
Similar to building personal credit, your business credit can be positively impacted by making on-time and early payments. Why? Many business credit agencies rely on data supplied by your payees about your payment history with them. This can improve your business’s reputation in more ways than one. Making a habit of meeting your financial obligations on time or early can drastically improve your existing business relationships. When they report these positive payment experiences to credit bureaus, it helps build trust with future potential business partners. You may need to ask your vendors or creditors to report payment experiences if they don’t already. In fact, it is estimated that only 2% of suppliers actively report to business credit agencies.*
Tip 3: Make sure all the information in your credit file is accurate and up to date.
Business credit reporting agencies can gather information from multiple sources to determine the credibility of a company. Your business may already have a credit file even though you haven’t registered it with a particular agency. In order to maintain a consistently trustworthy identity for your business, it is important to know what information may already be in your credit file. One quick and easy action that can help impact your business credit file is to conduct a search for your business with the various credit agencies and correct any inaccuracies or incomplete information.
Dedication to building and maintaining strong business credit can help you set your business apart from the competition, reduce the burden caused by unexpected expenses, and maintain the operating capital necessary to grow and expand. Don’t wait until you need credibility to begin building a solid reputation for your company – begin building and monitoring your business credit today so you’ll be ready for your next big opportunity.
Amber Colley, Senior Vice President and Business Credit Expert, Dun & Bradstreet
*Marco Carbajo, “How to Open a Business Credit File,” Small Business Administration, September 14, 2017,