What Does This Mean For My Business?
Building good business credit is the lifeline of your business. It enables you to obtain necessary funding for things like expansion, capital expenditures, research and development, and staffing. It’s instrumental in seeing your business grow because cash flow is essential for business survival. Establishing good business credit will help you to keep the money that you’re making to cover day-to-day operations. With good business credit you’ll be able to take advantage of time-sensitive offers and promotions without sacrificing or cutting corners on your quality of product or service.
The only goal isn’t having more money on hand, it’s also how you negotiate terms on business loans, insurance premiums, and even leasing payments. With good business credit, you’ll receive much lower interest rates which puts more money in your businesses hands and ensures that you’re being a good steward of all God has blessed you with.
Your business credit profile is pulled from:
- Payment and banking data
- Suits, liens, judgements, UCC’s, business registrations, incorporations, and bankruptcy fillings from state and county courthouses
- Corporate financial reports
- Contracts, grants, loans, and debarments from the federal government
- Web mining
- News & media
- Yellow Pages and other directories
- Direct investigations and interviews with company principles and other companies that you work with
Much like the banks use the FICO score, Dun & Bradstreet have their own scoring method that uses data gathered from the above mentioned sources to create an unbiased creditworthiness score.
A Dun & Bradstreet score is comprised of:
- An overall assessment of your business’s viability & creditworthiness called the Dun & Bradstreet Rating.
- A predictive indicator that measures the likelihood of your business paying on time within its terms called a PAYDEX score.
- A credit limit recommendation used as a guideline for how much credit should be extended to your business at any given time.
- A measurement of the likelihood that your business will experience financial stress in the next year called a Financial Stress Score.
The biggest contributor to any of these components is how you pay your bills. The more bills that are paid on-time and down to a 0 balance, the higher your score will be.