Credit and credit ratings are an interesting item to study, in many cases, unless a person is completely incorporated, their credit scores influence the business does and vice versa. Being a Corporation or at least a Limited Liability Corporation a potential owner can avoid many of the problems that can occur with intermingling individual credit ratings with your business. Founded originally in 1841 as Mercantile Industry, Dun and Bradstreet have been in business as a credit rating, information-gathering service for well over 100 years in this country. As with every credit rating agency whether it be for personal credit or corporate credit some follow, Experian, Equifax, Trans-union, Standard and Poor's, A. M. Best and many others they make the bulk of their money "selling" information. The difference with Dun and Bradstreet is that they make money on every side of the proverbial "fence." They have a collection agency, a credit rating agency, and an information-dispersing agency. To use any of these one must pay, and admittedly the information they have at their disposal is very in depth and usually worth the fees charged. Unfortunately, due to legislation they can continue to charge or revoke your ability to use it.
Over 4 years ago, I hit bad times in my "career" paths and
was forced to take a temporary job with Dun and Bradstreet
selling "small business" packages. Over the course of six months or so, I
learned more about credit and credit ratings than I ever wanted to know.
However, through my time there I was also able to use the knowledge gained in
my next career bid, working for Citi Bank, arguably the worlds largest
privately held consumer based bank. What I learned while working here is that
the smallest change in a person's situation can directly affect their credit
scores. There are hundreds of "Life Coach" people offering thousands of ways to
live credit free. I hate to tell the people giving money to these shysters that
it is relatively impossible (unless you move to the mountains and never see
another human again) to live credit free lives.
Every single payment you make whether it be your car insurance, medical insurance, rent, mortgage, electricity, gas, phone and or internet bills is directly linked to your credit ratings. In one instance while working for a mortgage lender a person who had no credit rating approached me. Over the course of their lives, they had always paid in cash and while there were a few hits by utilities this poor person had no credit history and thus was unable to purchase a house.
In the corporate world the same general rules apply (at
least in the United States- there are over 64 credit rating agencies worldwide
for corporations,) corporations will offer a business with an excellent credit
rating much better terms when doing business (supplies etc.) Instead of a net
15-30 for invoicing, you may receive a net 45-60. Everything is based on your
ability and desire to pay on time.
Some people may disagree with my statements, I would than tell them to go directly to their local utility companies, or phone companies (cell phones are the best) and ask them (usually in writing) if they utilize credit scores when opening accounts and if they are reporting regularly. Then ask the apartment complex where you live which credit agency they use to verify if you are a stable person or not. As a small business owner, you can ask your suppliers, what you need to do to get a better net pay arrangement. Ask them if they use D & B for this or another of the large credit agencies.
Is the information these agencies have on file correct, there is only one way to find out? Get a copy of your report, and than be prepare to challenge every little thing that may be wrong, even if it is a misspelled name, or one digit off on an address. If this information is wrong here just like the children's game, "telephone," you will see larger errors arise over time. With many of the credit reporting agencies both consumer and business a letter documenting the exact issues and the fixes expected will suffice, after receiving the letter the credit reporting agencies (in the consumer world) must fix and or respond with why they will not within 45 days. For consumers you can go to the following site and do most of it online free, https://www.annualcreditreport.com/cra/index.jsp
Small business and even large business owners should call D &B directly and request a basic profile of their company, the person answering the phone will tell you no, you should insist that the basics are yours anyhow and than request a manager. Afterwards when you are able to submit and fix the basic report (which they have to allow) call the other major business agencies, Standard and Poor's, and A. M. Best as well.
Remember, whether you are a consumer or a small business
owner your credit rating is most likely the one and only thing that will make
or break you financially. Many companies when hiring now also pull a credit
report, understand what is on yours, and be willing to work to fix it. I would
tend to agree with the people who wish for end to this system, as it is really
a flawed system.
There are no true checks and balances, and while you are able to challenge potential issues if the agency can verify to their satisfaction that the problem is yours they will tell you simply, this is your issue, no explanation required or given. I would recommend calling your State Senators, and Congressmen to lobby getting this changed so that we the consumers are better able to address our credit ratings, whether we are consumers or businesses. Currently as a business, your only real hope if you wish to achieve better rates etc. from other corporate interests and banks is to work with the system that is flawed.
To answer the title question, yes your credit rating as a business or individual can make or break you and unfortunately, in many cases it may be completely out of your control. So monitor your report, do not hire someone to do it for you- contact the reporting agencies directly and get a simple report, for consumers you are allowed one free report (no score attached) annually. For corporations call the major bureaus and you may pay a small fee for a basic report, but the important thing is to make sure that information is correct.
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