Small business owners need to check credit reports

Small business owners need to be savvy about their companies' credit reports, just as they need to keep an eye on their personal credit files.

That advice comes from Jeff Stibel, CEO of Dun & Bradstreet Credibility Corp., one of the companies that track small business credit. Whether you're hoping to get a loan, have been turned down for one or are just running your business, you need to stay on top of what's in your credit file, he says.

Many owners may not realize they have a business credit file, or know what's in it, until there's a problem, like a rejection for a loan. But other things can go wrong even after a company gets a loan or line of credit. Banks cut the credit lines of many businesses during and after the recession, even those of companies that were doing well and paying their bills on time. Those actions were similar to the reductions many homeowners had in their home equity lines of credit.

It may be possible to undo the damage, Stibel says. A look at a credit report can help.

A common problem for many small businesses since the recession is that as they lowered expenses, they had fewer bills to pay, and fewer payments showing up in their credit files, Stibel says. Many might have vendors that don't report payments to credit reporting agencies. But by working with the bank, vendors and the agencies, an owner might get those payments recorded.

But don't wait for a problem to happen. Ask companies like Dun & Bradstreet Credibility, Equifax and Experian for copies of your company's credit reports, and be sure they're complete.

You should also have a solid relationship with a banker, long before you apply for a loan, Stibel says. When a banker knows you, they're more likely to reconsider a rejection based on an incomplete report.

"If you've got a long-standing good relationship with the bank ... and you can prove you're paying the bills, banks will be incredibly flexible."

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