Building credit for your business takes time. Sure, there are tools and helpful guides which can make the process easier. Yet the truth is that establishing good business credit scores requires a lot of effort and consistency on your end.
If your business has earned good credit scores, kudos! There’s no doubt that you worked hard to make those good credit scores a reality.
But what happens when all your hard work is suddenly derailed by something that isn’t your fault (and is out of your control)? Errors on your business credit reports may damage your business credit scores and could make you appear less credible in the eyes of a lender.
Thankfully, if incorrect information ever shows up on your business credit reports, there is something you can do about it.
How to Correct Incorrect Information on a Business Credit Report
Although they may seem similar on the surface (and they are similar in many ways), it’s important to understand that your business credit reports and scores differ from your personal credit. Perhaps the most notable way the two are different has to do with the fact that business credit reporting and scoring is far less regulated.
On the personal credit side, the Fair Credit Reporting Act (FCRA) offers you a robust package of rights which can protect you from unfair credit reporting practices. So, for example, if a mistake winds up on your personal credit reports from Equifax, TransUnion, or Experian, you can leverage your rights under the FCRA to dispute the errors and (hopefully) have them removed.
Unfortunately, the FCRA does not apply to businesses. But that doesn’t mean you can’t do anything to protect the accuracy of your business credit reports. You can, in fact, do a lot.
1. Check your business credit reports for accuracy.
Step one to making sure your business credit reports contain only correct information involves — you guessed it! —checking your reports. It’s up to you to review your business credit reports from Dun & Bradstreet, Experian, and Equifax. Checking your reports allows you to confirm that the information included on them is indeed accurate.
Unlike consumers, businesses are not entitled to a free credit report once every 12 months. (Businesses don’t enjoy FRCA protections, remember?)
Here are three ways you can access your business credit reports:
- Request a free business credit report if you’ve been denied for financing. (Be sure to mail in the request within 90 days of receiving your credit denial letter in the mail.)
- Contact Dun & Bradstreet, Experian, and Equifax directly and purchase a copy of your business credit report from each commercial credit bureau.
- Access your Experian and Dun & Bradstreet credit reports at no charge by setting up a free account with Nav. (Bonus: You’ll receive access to your Experian and TransUnion personal credit reports and scores for free as well.)
2. Dispute incorrect information.
If you identify errors on your business credit reports when you review them, you’ll need to notify each commercial credit bureau who is reporting the incorrect data about your company. You can get details on how to file a dispute with each of the three commercial credit bureaus here:
3. Follow up if needed.
Don’t be afraid to follow up with the commercial credit bureaus if your first attempt to get a mistake resolved is unsuccessful. Nav Founder and CEO Levi King shares his personal experience about getting denied for a business loan due to incorrect information on his business credit report.
It took King months to get the errors on his business report fixed. Yet it was worth the effort. Once the mistakes were removed from his business credit report, he got approved for the loan he wanted.
4. Monitor your business credit reports moving forward.
Once you’ve made sure the information on your business credit reports is accurate, your job doesn’t end there. Your reports can change any time information is updated or added to them. You will need to develop a habit of consistently monitoring your business credit reports for accuracy from here forward.
Why Business Credit Errors Can Be a Big Deal
As a busy business owner, there are probably dozens of pressing concerns on your plate right now. You may not feel like you can another item to your growing to-do list.
Yet here’s the truth. You can’t afford to ignore incorrect information on your business credit reports.
When your business credit reports are damaged by incorrect negative information, you might:
- Pay higher insurance premiums
- Be charged higher rates for financing
- Get rejected when you apply for new loans or credit cards
- Have difficulty securing leases for equipment, office space, retail space, etc.
Even if you think an error is minor, like the wrong number years in business or an incorrect industry code (e.g. SIC or NAICS code), don’t ignore it. If your company is classified as belonging to a riskier industry type, there’s a chance that wrong code could impact your business credit scores negatively. The same can be true if your reports make the age of your company appear to be younger than it really is.
Here’s another fact to consider. Access to business credit reports isn’t as restrictive as personal credit reports. Business credit reports are available to the public.
If there are mistakes on your company’s credit reports, it can make your business look bad to anyone who checks them, and not just when you apply for a loan. This is one more reason it’s important to monitor your business credit reports on a regular basis.
As a business owner, it’s understandable to feel overwhelmed. However, it’s not okay to ignore the mistakes on your commercial credit reports — especially mistakes which might damage your business credit scores. If you put your business credit errors on the back burner and tell yourself you’ll deal with them later, you might come to regret the decision.
Ready to review your personal and business credit? You can check both for free, courtesy of Nav.