If you want to grow your business, you’ll eventually need credit. Accordingly, it’s important to ensure that your credit report remains updated and accurate.
The Fair Credit Reporting Act safeguards your personal credit rating. It protects consumers from unfair and inaccurate credit reporting. However, your business credit doesn’t have the same protection as your personal credit.
For this reason, it’s important to stay on top of problems with your business credit. By doing so, you can fix errors and inaccuracies as soon as possible. You can also take action to repair business credit.
To learn common errors in business credit and how to fix them, read on.
Is Your Business Credit Yours?
It may surprise you to know that accounts listed on your business credit can belong to another company. This kind of mistake happens often. It occurs because of the way that credit bureaus add information to business profiles.
Creditors report information to business credit bureaus. The bureaus will then match that information to the company and add it to the credit report.
A credit bureau uses a company’s name and address to match the account. However, the bureaus don’t always make an exact match when adding information to a credit profile.
For instance, a business may have a similar name to yours. In this case, their credit remarks might accidentally end up on your company credit report.
Credit bureaus manage personal credit information differently. They must match three out of four criteria to make a match. These criteria include your name, Social Security number, date of birth, and address.
As you can see, the process for managing business credit is much less thorough compared to personal credit. Accordingly, it’s much easier to mix up business information. For this reason, credit bureaus often make mistakes when adding business credit information to a profile.
Your Time in Business Matters
When it comes to credit, the number of years that you’ve been in business is important. The longer you’ve been in business, the better it is for your credit. However, credit bureaus can also make mistakes in this regard.
It may not seem much of an issue to have a credit bureau mistakenly report your years in business. However, imagine that you’ve been in business for ten years, but a credit agency report says that you’ve been in business for five years. This kind of discrepancy can have a highly negative impact on future credit approvals.
The age of your business is important to many kinds of vendors. For example, you want to show a good history of business if you apply for financing or a vending account.
The time that you’ve been in business is also very important for various credit scoring models. Imagine, for example, that you have a business credit card. If a credit agency reports too little credit history, it may impact your business credit score unfairly.
Hackers Can Ruin Your Business Credit
Any credit report contains a considerable amount of sensitive, personal information. Accordingly, you don’t want that information to fall into the hands of malicious actors.
For this reason, the Fair Credit Reporting Act restricts credit bureaus in regard to sharing your information with certain individuals. They can only share your personal information for allowed purposes.
However, businesses don’t enjoy the same protection. Credit bureaus can sell your business credit information to anyone who will pay for it.
Also, hackers can find out information about your business on the Secretary of State website. As a result, it’s not difficult for malicious actors to get their hands on your company information.
For example, a hacker may access your EIN, business name, and address on the State Secretary website. They can then use that information to open financial accounts under your business name.
By doing so, they can fraudulently access several financial instruments. These instruments might include business credit cards, business loans, or a business credit line.
There are other financial instruments that hackers can access using your business name with the right information. What’s worse, they can do it without your knowledge.
For this reason, it’s especially important to monitor your business credit. You can’t stop business identity theft. However, you can react to it quickly if it happens.
The Biggest Business Credit Tip of All
You should always keep your personal and business finances separate. Firstly, the Internal Revenue Service prefers this practice.
If you purchase something for personal use, you can’t use it as a business deduction. You also cannot use it to offset business income.
More importantly, mixing personal and business finances can lead to trouble. For example, if you combine your personal and business spending, you could face an audit.
By separating your personal business taxes, you can make record-keeping less complex. You’ll also make it easier to analyze your spending for both your business and your personal life.
How to Repair Business Credit
Every credit agency has a different procedure for fixing errors. It can take a month or more to correct a mistake on your report. When you find an error, it’s important to start the resolution process as soon as possible.
Meanwhile, it may prove helpful to open other financial accounts. By acquiring more business credit and paying on time, you can start on the path to business credit building.
Fund Your Future With the Right Line of Credit
Now that you know more about business credit errors and how to repair business credit, you need a funding source that understands your unique circumstances
Inspyre Funding offers financial services to businesses across the United States. We provide alternative funding options for small to midsize companies.
With Inspyre Funding, you can access the funds you need to launch, grow, or sustain your business.
Call an Inspyre Funding representative today at (844) 467-7973 or connect with us online to get started.