small-business-marketing

Business credit reports and scores are vital risk management tools. That's why it's natural - and necessary -- to ask one question: Are they accurate?

The answer to this question can have a big impact on your risk management strategy and your customer relationships. Yet it can also impact your business directly if your own credit score is based on inaccurate or incomplete data.

Let's break this down and address each concern in turn.

Customer Credit Checks

The three major business credit-reporting agencies - Dun & Bradstreet, Experian, and Equifax - draw data from a number of sources to compile reports. In the case of Dun & Bradstreet, a company's Paydex score is also compiled from a company's payment history.

Most businesses strive to report accurate credit data on their customers and creditors. In the case of Dun & Bradstreet, the reporting agency also plays a role in managing the integrity of its data. As a result, the end product - the customer credit history - is typically both accurate and up to date.

Here's my recommendation: When you look at customer credit data, don't lose sight of the big picture. A report from a company like Dun & Bradstreet can provide a wealth of data on a company's history, key business metrics, payment trends, and financial stability. Even when an error does appear in a report, the overall trends rarely lie - and they can give you the resources you need to assess credit risk.

Checking Your Own Business Credit

This concern is even easier to address. That's because there's simply no excuse for not knowing what information appears in your own business credit profile.

Most consumers know to check their credit reports at least once a year. Businesses should do the same - but they should do so more frequently, given the amount of data that typically flows into a profile.

Don't just look at your credit score. Even an innocuous error like an incorrect phone number might complicate your business relationships - and they're easy to fix.

Monitoring and managing your credit profile is absolutely essential. Treat it the way you'd treat your tax records or financial reports, and you can be absolutely certain that your profile is accurate and up to date. And that will make it an essential business asset.