If your suppliers have your D & B number & report to D & B, you’ll begin to build a credit history and eventually establish a Paydex score. As with a personal credit score, you build a solid Paydex score by staying current on your payment terms with your creditors.
Having a good business credit score does not mean you can let your personal credit score slide. Small businesses are judged on both the owner’s credit and the business’ credit when being evaluated by banks and financial institutions. The best credit management practice is to keep your balances low on both business and personal credit lines.
The way to get into the D & B system is to apply for a D & B number. If you don’t already have one, you can get one for free. It takes about 30 days and arrives snail mail. If you are applying for a government contract, you can get an expedited one online for free.
Thanks to the FACT Act (Fair and Accurate Credit Transactions Act), you are entitled to one free credit report every year from each of the three major national credit reporting agencies (Equifax, Trans Union, and Experian). (If you also want your credit score, you’ll have to pay a fee.)
Checking your credit report at least annually is very important to your financial well-being – and often overlooked in our busy lives. To obtain your free report, go to www.annualcreditreport.com and follow the instructions.
Erroneous or outdated information in your credit file can cost you money because it lowers your credit scores, so it’s worth the trouble to check your credit. If you find incorrect information, you can contest it and have it corrected. Instructions for doing so can be found on each of the credit reporting agency websites & may be submitted online in most cases.
Be wary of “credit repair” scams. There are reputable firms in the credit repair business, but also many rogue companies that will charge fees and not do anything.
If you’re considering hiring a company to help improve your credit scores, be sure to check them out with the Better Business Bureau and your state’s Attorney General or Consumer Protection office before hiring them.
If you are thinking of doing work for the federal government or applying for a federal grant, you’ll need to have a D-U-N-S number issued by Dun & Bradstreet. This number is the reference number that Dun & Bradstreet assigns to your credit and business file. It’s commonly known as a D & B number.
Most banks and many of your suppliers or vendors will also use your D & B number to pull credit references for your business. If you don’t have a number, you can get one online for free.
Some adjustable rate loans are tied to the prime rate. This type of loan is usually referred to as Prime Plus and the rate moves up or down based on changes in the prime rate.
A very good customer may pay the prime rate, while a less creditworthy customer will pay a rate pegged to the prime rate with an additional percentage added on.
In the latter case, the loan rate is calculated by taking the Prime Rate and adding an agreed upon percentage. For example, if the Prime Rate is 3.5%, a rate of Prime + 2% would be a loan rate of 5.5%.
The content on this site is provided for educational and informational purposes only. It is not intended nor provided as financial or legal advice.