Is my small-business payment history reflected on my credit reports, scores?
Elaine Pofeldt is a journalist whose articles on entrepreneurship and careers have appeared in Fortune, Working Mother, Money and many other publications. She is a former senior editor at Fortune Small Business magazine and an entrepreneur herself, as co-founder of 200kfreelancer.com. Her book, “The Million-Dollar, One-Person Business,” was released in 2018. She writes "Your Business Credit," a weekly column about small business and credit, for CreditCards.com.
When I opened credit cards for my small business 11 years ago, I signed to be personally responsible for all debts. Will I get the 'good credit' that comes with on-time payments?
The best way to find out if your payment history has been reflected on your credit is to check both your business and personal credit reports and scores.
Dear Your Business Credit,
When I opened my small business in 2007 and opened business checking accounts and credit cards, no bank would do this for me unless I signed, saying that I would be personally responsible for all debts.
I thought this was odd, since I thought an S Corp was a separate and distinct entity. Anyway, we needed credit cards and bank accounts, so I did what was asked.
Now, 11 years later, will I, or the business get the “good credit” that comes with always having paid the S Corp bills on time, etc. – and what would you do if you were in my shoes? – Sandra
See related: Am I on the hook for my business credit card's debt?
Congratulations on building such a strong and consistent track record of paying your bills on time for the past 11 years.
That’s not always easy to do in a small business, especially during the early years. Whether that activity has started to show up on your credit reports or not it’s powerful: It tells other businesses you are great to work with.
It is not unusual to be asked to personally guarantee a small-business credit card or loan, whether you run an LLC, an S Corp or an unincorporated sole proprietorship. Lenders want to know that if they loan money to a small business, someone will pay it back.
For smaller and newer businesses, they expect the buck to stop with the owner. For larger businesses, banks often rely on the PAYDEX score, issued by Dun & Bradstreet.
Requesting, and understanding, business credit reports and scores
To check on what credit cards and activity is being reported on your business credit score, request a business credit report.
- A good place to start is Dun & Bradstreet, which many banks will check before lending money to you.
- If you request a report from them and find that little or none of your activity is being tracked, request what is known as a D-U-N-S number from Dun & Bradstreet. This is a little like a Social Security number for your business.
- D&B tracks activity using business credit cards and your payment history with vendors in the Fortune 500.
D&B isn’t the only company that issues business credit scores, so I would also suggest seeing what shows up on your business credit report with Experian, Equifax or D&B.
You can use the free search tools on their site to see if they are tracking your business.
For business credit reports, you generally have to pay a fee but it may be worthwhile for you to know where you stand if, for instance, you are getting ready to apply for a substantial loan.
You’ll notice each bureau calculates your credit score a little differently, looking at a plethora of indicators. These may include how long you’ve been in business, your credit utilization and the lines of credit you’ve opened in the past six months.
They calculate your business credit score differently from your personal credit score. It ranges from 0-100.
Tip: Many credit card issuers now offer free access to your credit score, including American Express, Citi and Capital One.
Checking your personal credit report and score
If you want to check your personal credit score with the three major credit bureaus (Experian, TransUnion and Equifax), you can go to MyFICO.com, or check it through your credit card issuer, if they offer complimentary access to it.
Requesting the credit reports from the main bureaus will enable you to see what they are actually tracking.
You can order a free copy of your credit report from all three companies once a year at AnnualCreditReport.com.
Business activity reflected on your personal credit score
You may find that very little of your business credit activity shows up on your personal credit scores – often lenders don’t report it unless you become seriously delinquent – but here again, it’s worth seeing what’s being tracked.
My guess is with your timely payment habits, you’ll be happy with what you find.
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