If you operate a small company, or if you’re in charge of financial operations for a larger company, you know how important the business credit bureaus are. These bureaus — Dun & Bradstreet, Experian, Equifax, and a few others — maintain data on your company, along with millions of others worldwide, that is then used by lending institutions to determine your company’s creditworthiness. Business credit reports can also be purchased by potential suppliers, clients, partners, and others who will use the reports to decide whether it’s advisable doing business with your company.
Given the importance of these reports, how do the bureaus compile their information? Because these reports are used so widely by lending agencies and others, their reliability is of primary importance, not only to lending institutions making individual decisions but to the integrity of the credit system worldwide. So the bureaus, generally longstanding publicly held companies, must use rigorous procedures to ensure the reliability of their reporting as well as their own reputations.
The first place that credit bureaus look for information is from the companies themselves. Dun & Bradstreet, for instance, conducts telephone interviews with principals at companies, either in compiling new reports or in updating existing ones. It’s important to be transparent and forthcoming during these interviews. If you have favorable financial information, be sure to share it; the bureau will usually find this information through other means if necessary, so by being completely open at least with good news about your company, you can ensure that this information is reflected in their reports. You can share information over the phone, or submit financial statements to D&B.
There have been some complaints that Dun & Bradstreet has become overly aggressive in marketing company-oriented products during these phone interviews, or during call-in requests for a DUNS number. Some interviewers have even been accused of suggesting that a company’s credit rating can be improved by purchasing a credit monitoring service from D&B. There is no obligation for you to purchase any service or product from a credit bureau to ensure a fair and accurate report, and if you believe an interviewer is “crossing the line,” then ask to speak with a supervisor; or, get the name of the interviewer, end the conversation, and immediately contact D&B independently.
Credit bureaus use various other sources of information to compile reports. State and county courts and business bureaus maintain records of incorporation filings and business registrations; this public information is easily accessible, and can be used to verify information obtained elsewhere.
Corporate financial reports for U.S. publicly listed companies — i.e., companies that sell stock — are all filed with the Securities and Exchange Commission (SEC), and these reports can be examined by the credit bureaus or anyone else who is interested. Usually, a public company will include a number of financial statements in their annual reports to stockholders. It can be more difficult gaining access to privately held companies’ financials, since there are no filing requirements with the SEC. Some websites serve as clearinghouses for company information (though the information at these sites can be spotty), and some private companies post their financials on their own websites. If you represent a private company and believe that your financials put you in a favorable light, it’s usually in your best interest to volunteer this information to the major credit bureaus.
Some of the most critical information in your business credit reports comes from companies that do business with you — whether payment data from suppliers and creditors, banking and loan data from lending institutions, or general information from partners, clients, and others. Your creditors may not be as meticulous as you are in keeping records current, so it’s critical for you to examine your business credit reports on a regular basis, to ensure that they are accurate and up-to-date. If there are errors, get them fixed as quickly as possible. And if you have had problems keeping current with payments with one or more creditors, and these irregularities reflect badly in your credit report, the major credit bureaus can help you with strategies for improving your report.
If you have done business with the U.S. Federal Government — whether contracts, grants, or loans — these records are all available through the involved federal agency. Credit bureaus can also sift through public records at local courts, such as bankruptcy filings and records of suits, liens, and judgments. Universal Commercial Code (UCC) filings are also in the public record, and can include documents such as financing statements, federal tax liens, security instruments, and other filings.
Credit bureaus compile information on millions of companies, and their resources are of course limited, but plenty of company information can be gleaned by Internet data mining, from the trade press and other reporting, and in various print directories. There are any number of good reasons why you would want your company to project a favorable corporate image, and making sure that the credit bureaus can find only positive reports about your company online and in the press is one of them. If called for, consider hiring a public relations firm to upgrade your corporate image.
Given all the information that’s likely available about your company, whether you are publicly listed or not, credit bureaus may not have the time or resources to sort out any irregularities or ambiguities. Be sure to access their information on your company on a regular basis, and fix any errors. The most reliable information about your company is what you yourself can provide.
