If someone opened a loan, line of credit, or account in the name of your business, would you know? It’s a question some business owners may want to ask themselves, especially in light of reports that some of the unauthorized accounts opened by Wells Fargo employees were business-related and allegedly included business credit cards.
Most business credit cards and many business loans are not reported on consumer credit reports. Wells Fargo is typical of most major small business card issuers in that it does not report small business credit card activity to the owner’s personal credit reports unless the account is delinquent. (This chart shows how major card issuers report business credit cards to personal credit.)
Most business credit cards are, on the other hand, reported to commercial credit agencies. The problem? Most business owners aren’t reviewing those on a regular basis.
A recent survey and whitepaper by Manta and Nav found that 72% of business owners surveyed don’t know their business credit score, and 60% don’t know where to find it. The majority of small business owners aren’t monitoring their commercial credit reports for possible fraud.
If you aren’t checking your business credit on a regular basis, then the only way you are likely to find out about unusual activity is when something negative happens: A debt collector calls or sends a dunning notice, or you are turned down for credit or other benefits and review your reports as a result.
It’s risky for small business owners to ignore their credit until something bad happens. It takes time to straighten out mistakes—especially in the case of commercial credit reports, which don’t fall under the federal Fair Credit Reporting Act and therefore do not require a timely response to disputes.
To be fair, a business credit card with no activity wouldn’t likely have a major impact on business credit scores. But if a cardholder is unaware of the account, and as a result annual fees or penalty fees go unpaid, that negative information could be reported.
Business owners should also realize that business identity theft is a serious threat and often goes undetected for a significant period of time, again, because the business owner isn’t keeping tabs on his or her credit reports.
What to Look For
When you do check your small business credit reports, you may initially find them confusing when compared to personal credit reports. That’s because lender names are withheld for competitive reasons. So you must figure out whether accounts listed are actually yours, and dispute those that aren’t.
Look at each account carefully to see whether it rings a bell. If there are any listed that you aren’t sure belong to you, contact the credit reporting agency. It’s not uncommon for information to get mixed up with that of another business with a similar name, so sometimes mistakes are simply accidents rather than signs of fraud.
Commercial credit reporting agencies aren’t required to investigate disputes or correct mistakes promptly, so be sure to mark your calendar and check again in a month or so. Using a tool like Nav to monitor your small business credit scores will alert you to changes in your credit. That’s helpful when you dispute mistakes, as well as going forward. Keeping tabs on your business and personal credit reports is not just helpful; it’s essential.
Can’t Get Enough?
This article was originally written on October 6, 2016 and updated on November 1, 2016.