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Home » Business Credit Basics » What's myth vs. reality?
What's myth vs. reality?
Business Credit
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What's myth vs. reality?
Your Business Credit Profile
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What's myth vs. reality?

Myth 1:
I don’t deal with big banks or suppliers. I’m a small business, and I prefer to deal with other small businesses. They don’t care what’s in my business credit profile.

Reality 1:
Just because you may deal with a small lender doesn’t mean there isn’t a big bank behind the credit the small lender extends to you. From large corporations to the family grocer, business deals decided on a trusted smile and a handshake are few and far between. After you submit your application to a small lender, behind the scenes your credit factors may be assigned numerical scores that allow your application to be processed automatically, without the direct involvement of your credit manager.

Given the relative size of small business loans, many financial institutions that process large numbers of applications typically use automated decision-making processes. Some of the most popular decision-engines in use today use cut-off scores to accept or decline the lion’s share of applications, relying on manual evaluation only in those cases that are inconclusive .Therefore, even though your neighborhood bank officer thinks you are creditworthy, he may be unable to decide whether, and on what terms to extend you credit.

This is true not just for lending, but also for insurance, leases, and similar financial arrangements.


Myth 2:
I don't need to monitor changes in my business credit profile, things don’t change that often.

Reality 2:
Every business decision you make and every transaction you undertake can impact what information your suppliers, service providers, customers, and business partners see about your business. At Dun & Bradstreet we make over 1.5M updates to our database on a daily basis. It could be major transactions like paying vendors or making lease or mortgage payments, but it could also be seemingly smaller transactions like equipment leasing, advertising, shipping packages or underwriting insurance. Every business transaction you make affects what the business world sees about your business. All these changes can affect the terms you get from your creditors or your bank; they can affect the prices you pay for insurance, all having an impact on the lifeblood of your business, cash flow and your reputation. In today’s world it is critical to keep on top of your record, it’s a resume on your business and it impacts your credit score, your attractiveness to vendors / service providers and your brand image.

Myth 3:
I’m too small and new; I don’t really need to monitor my own file.

Reality 3:
Over 85% of Dun & Bradstreet’s database represents companies with less than 50 employees. Being small and new is all the more reason to monitor your profile. As you’re establishing relationship with your suppliers, service providers, banks and insurance companies, putting your best foot forward is important. As you're establishing your business, third party providers will be supplying Dun & Bradstreet with information on your business:

Business registration information will come from public records indicating ownership and the legal business name
Demographic information (business name, address, phone number, line of business) will be provided by telephone companies
UCC filings will be supplied for equipment leasing
The Post Office will confirm the business mailing address
Business Directories will supply information based on advertising you may have created
Suppliers and service providers provide experiences about how you pay your bills, loans, leases, etc.

With all this information flooding into Dun & Bradstreet, it’s critical that you keep on top of your profile and credit score to help ensure you keep your reputation solid as you forge the relationships and partnerships that will enable your business to grow profitably.



Myth 4:

My business credit profile doesn't affect my cash flow.

Reality 4:
Keeping on top of your business profile enables you to see how your business partners see you. The terms, credit limits and rates you receive from vendors, service providers, banks and insurance companies greatly affect your cash flow. By monitoring your profile and maintaining a strong credit score you can get the most favorable terms and rates that enable you to save money and improve your cash flow.

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