As a kid, few consequences were more frightening than the threat of having something go on your permanent school record. Any slip-up, large or small, could go on this life-determining record. The prospect of a tainted record was all most of us needed to sit up straight, respect our teachers, and resist the temptation to shoot a spitball at the blackboard.
Your credit report is the adult equivalent to your school record. You even get graded for it. It also has real-life consequences. What happens if your business credit report comes back with mistakes? That’s like having an expulsion on your record that never happened.
Fixing business credit report mistakes isn’t simple, but it’s not impossible either. Be prepared to make several calls, carefully go through your company’s financial records, and remain vigilant. As challenging as this may seem, it’s worth it in the end. Plus, you can keep an eye on your big picture financial metrics with PayPie.
Finding business credit report mistakes
Before a potential error on your business credit report makes you shake your fist at the sky in anger, check your books. Rule out any possibility that you may have left out important information in your own recordkeeping. Think of it as the “Have you tried turning it off and on again?” step.
You should also ensure that you know what your business credit report covers. Your credit score is a numerical value that distills your company’s record of paying vendors and creditors on time, the amount it debt it owes, the length of your credit history, and any new kinds of credit your business has (loans, lines of credit, credit cards, etc.). Credit reports from Dun & Bradstreet, Equifax, Experian, and TransUnion all provide you with a credit score for your company, as well as a rundown of your business’ credit history.
Request a report from each credit bureau
Business credit scores vary by bureau. Some even include slightly different information on their report than others. Equifax, Experian, and TransUnion all use a scale of 0-100, with 100 being the top possible score. Overall grade assessments will differ depending on the criteria used and how these factors are evaluated. This is why it’s a good idea to request reports from each agency if you suspect there might be a mistake.
Once you have credit reports from each agency, you’ll want to read through them all and see if the information they contain matches up with your business records. If you’re certain that your credit report has a mistake, there are plenty of reasons why that might have happened. Better yet, there are several steps you can take to fix it.
Common business credit report mistakes
Some business credit report mistakes are more common than others. Most come down to human error. Here are some of the more common mistakes you might find on your credit report and how they got there in the first place.
1. Late payments from seven (or more) years ago
Your credit score should remove late payments if they’re seven years old or older. But this doesn’t always play out as it should. Sometimes, old late payments stay on credit reports long after they should. If this is the case, contact the credit bureau to contest the entry. They will either investigate the entry or simply strike it from your record if the claim is valid.
2. Credit accounts opened under a similar name
Credit bureaus aren’t perfect. Their data is often only as good as what gets reported to them, which means that clerical errors can cause credit report mistakes. If a company with a name similar to yours opens a credit account, there’s a possibility that their information might get mixed up with yours.
3. Closed accounts listed as open
Your creditors should note when you close your account or you finish paying your loan, but mistakes happen. Old credit cards or a closed business line of credit can show up on your current credit report due to clerical errors. This could accidentally signal to credit agencies that you have more credit accounts open than you actually do. In turn, it may suggest that your company is borrowing more than it should. Be sure to look for old credit accounts and loans on your report. Then check with your lenders to make sure they’re no longer open in their system.
4. Paid tax liens from seven (or more) years ago
Old tax liens on your credit report are similar to late payments. They no longer belong on your credit report if you paid them off and they’re seven or more years old. Most agencies will remove lien records once the seven-year mark hits. If you see an old lien on your credit report, reach out the credit bureau and request that they remove it.
5. Inaccurate credit limits or loan amounts
Credit agencies determine your score based in part on the maximum amount you’re approved to borrow (your credit limit), and the actual amount you’re currently borrowing (your loan amount). If this information is incorrect on your credit history, you may appear to be borrowing more money than you should — even if you’re approved for more than the report suggests. Make sure your credit limit information, loan totals, and remaining balance are all correct when you review your credit report.
6. Fraudulent activity linked to your business
Of all the potential sources of credit report mistakes, fraud is the most vexing. Credit fraud is all too common these days, with more than $3.7 trillion lost due to business fraud in 2017. It’s not always easy to keep track of daily cash flow, which can help prevent fraud before it happens.
Who to contact to fix business credit report mistakes
The process by which you fix business credit report mistakes varies depending on the kind of error in question.
When to reach out to vendors first
If your payment history with a vendor is inaccurate, contact the vendor before going to the credit bureau. Credit agencies rely on vendors for payment history information. So start by going to the source. Reach out your contact or someone within the accounts receivable department. This process also helps in clearing up confusion involving a similarly named company appearing on your business credit report.
When to reach out to creditors and lenders first
Give your creditors or lenders a call if your credit limit, payment history, or loan totals look incorrect. Odds are that they may not have updated your business’ profile. The same holds for any closed credit card accounts or loans that still appear to be open on your credit report. The creditors and lenders themselves are the first points of contact that can help clear up any issues regarding your use and repayment of credit. Again, it’s a matter of going directly to the source.
When to contact the credit bureaus first
There are a few reasons for reaching out to a reporting agency directly. The most common instance is when the other third parties can’t shed light on the mistake. You would likely reach out in cases where an old tax lien or delinquent payment still appears on your credit history after the seven-year mark expires. Or if you’ve solved the problem with the primary source, but your report itself is still incorrect.
When you have to fix an error on your credit report, the first thing to do is stay calm. Next, be patient. Fixing business credit report mistakes may take a while — and you may need to contact a few different companies to get things fixed.
Track your credit in near-real-time
Knowledge is power, particularly with regard to your company’s overall financial health. PayPie’s cash flow analysis helps you forecast future cash flow and track other key metrics like income vs expenses or where your greatest strengths, exposures, and opportunities lie.
Your business risk score, featured prominently in the report dashboard, is generated using a sophisticated algorithm along with the current data in your small business accounting software. This score (from 0 to 100) gives you a sense of how third parties, especially lenders, view the financial strength of your business.
The information in this article is not financial advice and does not replace the expertise that comes from working with an accountant, bookkeeper or financial professional.
Images via Pexels.