If you own a company, whether it is a corporation, partnership or sole proprietorship, you have probably raised questions — if not concerns — regarding business credit reporting. More specifically, you may have wondered, “Is it O.K. to access my personal credit for use in my company, or should I keep business transactions separate?” or, “What happens if I run into credit problems, business or personal?”
There is no one-size-fits-all answer to these questions. Depending on how your company is structured for tax filing purposes, there are advantages and disadvantages in using either type of credit — personal or business — or both. Some business owners or managing officers contend that personal credit financing can be a lifesaver when meeting short-term operational or funding challenges. Others claim that business credit holds more value in covering large overhead expenses because of the convenience and tracking features.
Regardless of the type of financial credit you access, favorable credit reporting is still contingent upon your attention and discipline in paying back creditors. Something you should keep in mind, though: Credit counseling and repair services can only address issues concerning personal credit reporting. When it comes to business credit reporting, you are on your own with Dun & Bradstreet, the global leader in business-to-business crediting reporting and management.
Unlike personal credit reporting agencies such as Equifax, Experian, and TransUnion, there is no program or mechanism for consumer credit repair services to dispute D&B on your behalf. This is primarily because there are no established guidelines for such dispute resolution. D&B’s business credit reporting and rating system is a different animal from consumer credit reporting. D&B primarily measures a company’s creditworthiness using a Paydex score, which is numerical value — 100 being the highest — based on how a business pays its bills or creditors on an annual basis.
Unfortunately, not having an appeals process regarding business credit reporting can sometimes leave owners in the dark. It is not unusual for a new company to rely solely on an owner’s personal credit to begin business operations. Then, once the company starts logging consistent, favorable credit reports, the owner’s personal credit liability is reduced and replaced with some form of business credit, generally based on viable trade or business references.
Still, new businesses — and even established companies — can remain financially vulnerable for short periods of time. That is why it’s extremely important to protect your personal credit liability from “business spillovers.” The more you can build business credit without any personal financial guarantees, the better. After all, you shouldn’t risk lowering your personal credit score just in exchange for boosting your business credit, if at all possible. Should personal credit problems arise in your business, even for the short term, a reputable credit repair service with a strong legal footing can be a partner in resolving these matters. At the very least, if you can successfully address your personal credit issues, you might open a financial pathway toward fixing your business credit problems, too.