How to Self-Report Your Business Tradelines & Build Credit
by Fundid on Jun 5, 2023 7:15:00 AM
Are you a small business owner who is looking for ways to establish and build up your business credit? If so, self-reporting your tradelines can be a useful option in this process. Self-reporting trade lines allows you to create an accurate reflection of the credit history related to specific accounts you have with vendors and suppliers that reflects the actual information shared by them.
By taking these proactive steps, it will help ensure that lenders have reliable and current data on which they can base their decisions about providing credit for your business. In this guide, we will learn the steps needed to self-report your business credit tradelines to Dun & Bradstreet (D&B).
What is Dun & Bradstreet?
If you're a business owner, you may have heard of Dun & Bradstreet, but may not know exactly what it is. Let's break it down. Dun & Bradstreet is a company that provides data and analytics about businesses. They gather information from various sources, such as public records and credit histories, and use it to create credit reports and business profiles.
These reports can be used by banks, lenders, and other businesses to make decisions about loans, partnerships, and other financial matters. In short, Dun & Bradstreet is a tool that can help you better understand the financial health and reputation of your own business, as well as those that you may be interested in working with.
Why is Establishing Business Credit Important?
Establishing business credit is crucial for any company, no matter its size or industry. By building a strong credit history, your business can qualify for better financing options and negotiate better terms with suppliers and vendors. Additionally, a good business credit score can help your company stand out to potential lenders and investors, increasing your chances of securing funding for growth and expansion.
Having a separate business and personal credit can also protect your personal assets in case your business faces financial difficulties. Overall, establishing business credit is a wise and necessary investment in the future of your company.
Related Reading: 10 Ways to Separate Your Personal and Business Credit
Steps to Take to Self-Report to Dun & Bradstreet to Build Your Business Credit
By self-reporting to Dun & Bradstreet, you can establish a credit file and increase your credibility with lenders and other businesses. By following the necessary steps, you can establish a credit file for your company, which can help you secure financing, win contracts, and build your reputation in the business world. Let's get started!
1. Obtain a D-U-N-S Number: A D-U-N-S Number is a unique identifier assigned by D&B to each business. If you don't have one, you'll need to obtain it before you can report your tradelines. Visit the D&B website (dnb.com) and navigate to the "Get a D-U-N-S Number" section to request one. It's free for most businesses.
2. Create a D&B Business Credit File: Once you have your D-U-N-S Number, you can create a business credit file with D&B. Go to the D&B website and search for the "D&B D-U-N-S Number" section. Enter your D-U-N-S Number and follow the prompts to create your business credit file.
3. Gather Tradeline Information: Collect the necessary information for the tradelines you want to report. This typically includes the creditor's name, your account number, the credit limit or loan amount, the date the account was opened, and your payment history.
4. Access the D&B CreditBuilder: The D&B CreditBuilder is a tool that allows businesses to self-report their payment experiences and tradelines. You can access it through your D&B account. If you don't have an account, you can create one on the D&B website.
5. Report Your Tradelines: Within the D&B CreditBuilder, navigate to the section where you can report your tradelines. Enter the required information for each tradeline, such as the creditor's details, account information, and payment history. Be accurate and thorough when providing the information.
6. Verify Your Tradeline Data: After submitting your tradelines, D&B may reach out to the creditors you reported to verify the information. It's crucial to have permission from your creditors to report their data, as they may need to confirm the accuracy of the information you provide.
7. Monitor and Update Your Business Credit Profile: Once your tradelines are reported, regularly monitor your business credit profile on the D&B website. Ensure that the reported information is accurate and up to date. Address any discrepancies or errors promptly.
Remember that D&B's CreditBuilder is a self-reporting tool, and D&B may verify the information you provide with your creditors. Not all creditors may be willing to verify or report data, so the ability to self-report tradelines can vary. It's essential to establish relationships with vendors and creditors who are open to reporting your payment history to enhance your business credit profile.
How is a Business Credit Score Calculated?
A business credit score is calculated using various factors and methodologies, depending on the credit reporting agency. One of the most prominent credit reporting agencies for businesses is Dun & Bradstreet (D&B), which uses the Paydex scoring system. Here are the key factors considered in calculating a business credit score:
1. Payment History: The payment history is one of the most significant factors in determining a business credit score. It assesses whether a business pays its bills on time, including trade credit, loans, and other financial obligations. Late payments or defaults can have a negative impact on the score.
2. Credit Utilization: Credit utilization refers to the amount of available credit a business uses. It compares the total credit used to the total credit available. Higher credit utilization may indicate a higher risk and can lower the credit score. It is generally recommended to maintain a low credit utilization ratio.
3. Credit History Length: The length of a business's credit history is also taken into account. A longer credit history demonstrates a track record of financial responsibility and stability, which can positively impact the credit score.
4. Public Records: Public records, such as bankruptcies, liens, judgments, and collections, can significantly impact a business's credit score. Negative public records can lower the score, while a lack of public records or positive records can have a positive influence.
5. Company Size and Financial Performance: Some credit scoring models may consider the size of the business and its financial performance indicators, such as revenue, assets, and net worth. A larger and financially stable business may receive a higher credit score.
6. Industry Risk: Certain industries may inherently carry more risk than others. The credit scoring models may factor in the industry risk to assess the creditworthiness of a business. For example, industries with high failure rates or economic volatility may have a lower credit score threshold.
It's important to note that different credit reporting agencies may have their own scoring models and methodologies. Other credit reporting agencies, such as Experian and Equifax, may consider additional factors or use different scoring systems to evaluate business creditworthiness.
It's advisable for businesses to maintain good financial practices, make timely payments, manage credit responsibly, and monitor their credit reports regularly to ensure accuracy and identify areas for improvement.
Commonly Asked Questions About Business Credit Scores
How can I use my business credit score to get financing?
While not all lenders will place a heavy emphasis on your business credit score, building and maintaining a good score can help position your business more favorably with those who do. Strong business credit scores show that your business is reliable and has a history of paying debts on time, making you a lower risk to lenders.
How can I improve my business credit score?
To improve your business credit score, make sure you pay your bills on time, keep your credit utilization low, and regularly check your credit report for errors or inaccuracies. With a strong business credit score, you'll be better positioned to get the financing you need to grow and succeed.
How long does it take to build a good business credit score?
Business owners may wonder about the timeline involved in building a strong credit score. They may want to know how long it typically takes to establish credit, demonstrate positive payment history, and achieve a favorable credit rating.
Find Your Next Lending Partner Through Fundid
Self-reporting your business tradelines is an effective way to get the credit score you need for more favorable loan terms or access to capital. Whether you’re just beginning to build business credit or want to improve on your existing score, there are various strategies that do not require high personal risk or time-consuming applications.
Get connected to small business lenders ready to support your growth! Through the Fundid Capital Marketplace, you can sort through the various loan options for your small business.