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Recent Fundings – July 2018

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How to check your business credit report

Your credit rating is a useful tool to help lenders evaluate your financial health. Your score is a reflection of your company’s ability to make payments on time — an important point on any lender’s checklist.

Get these quick answers to common credit report questions:

Where can I obtain my credit report?

There are many options to obtain your credit report including common providers like Equifax, Experian and Dun & Bradstreet. For personal credit reports, you can also look to sites like Credit Karma. Check around and find the right option for you.

Pull a credit report for both your business and yourself, and do this on a regular basis. Sometimes these reports also have incorrect information, and it’s important to be aware of mistakes so you can fix them.

What’s on the credit report?

Your credit score is largely based on public data and information that vendors and other lenders have reported. Each credit bureau has its own rating system, with some common examples below:

  • Dun & Bradstreet: PAYDEX Score: 0 – 100 (Good Score is 80+)
  • Experian: Credit Ranking Intelliscore: 0 – 100 (Good Score is 76+)
  • Equifax: Business Payment Index: 0 – 100 (Good Score is 90+)

You might also discover a multitude of items within your credit report that show signs of identity theft, which has become a modern reality. If someone is using your identity, there are going to be breadcrumbs and trails. Don’t be overly worried, but be aware that it is a possibility.

How often should I pull my credit report?

As for frequency, pull your reports yearly. It doesn’t cost a lot to obtain your own credit report (some may even be free), and the time it takes will be well worth it to make sure the information is accurate.

How to become lender friendly

Go beyond your credit rating and learn five more ways to become “lender friendly” and improve cash flow.

Access the complete eBook.


Will this impact my credit rating?

It’s a common misconception that requesting your own credit report could damage your credit rating. If you’re just obtaining the report and just looking at results, this will not have a negative impact. However, if too many banks or lenders request your report at the same time, that may have a negative impact, since it could signal that you’re shopping less strategically for financing. (See section 3 for more details.)

What’s a D-U-N-S Number and why should I request one?

Of note, it is worthwhile to request a D-U-N-S Number with Dun & Bradstreet. The D-U-N-S Number allows you to proactively add your most current information to Dun & Bradstreet’s records. It is used by lenders to predict if you are a reliable and financially stable company, and is an easier method for them to find your credit information.

Checking your credit rating will help you prepare for future funding and get a head start on the lending process.

For five more expert tips to improve your access to timely business funding, view the helpful eBook resource, “How to Become Lender Friendly.”

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Why you should perform a UCC or PPSA search ASAP

One of the most fatal financing problems is out-of-date or inaccurate “security registrations” filed against your business. Security registrations are filed by lenders or creditors when you buy or borrow to help guarantee you make your payments, often using personal property as collateral. These are common in the world of lending, and once your debt is paid off the record is discharged. But that isn’t always the case…

When these security registration records are incorrect, they can stop you from being able to secure future financing. Other lenders will shy away from providing you further financing since they won’t be able to claim the proper security interest against your assets.

Example security registration

Let’s say you purchased a printer from an office supply company a few years ago, making regular payments until the full price is paid off. The vendor (aka the lender) filed a security registration against your company to act as security — a loan for the printer until it’s fully paid.

After agreeing to your side of the bargain, you paid the printer off last year, which should mean the security registration is discharged. But after doing a search, you see that it’s still on your record and the vendor didn’t make the proper updates.

Now you’ll need to go back to your supplier and ask that they discharge the registration. Their admin is backlogged, and they say it could take days or weeks to fulfill the request.

How do you search for security registrations?

In the USA, a basic UCC search should be performed, while in Canada, companies should perform a PPSA search (or RDPRM in Quebec).

These searches, if done in the proper jurisdiction, will tell you if a third party is claiming a security interest in any property of your company (other than real estate).

 

How to become lender friendly

Follow all six steps to becoming “lender friendly” and get prepared to access funding from any lender.

Access the complete eBook.


What if I uncover incorrect security registrations?

Sometimes the security registration records aren’t clean. Even if you think there are no security registrations filed against your company, it’s worth double-checking the official records. Some common problems include:

  • Incorrect filings
  • Your debt was paid off, but the filing was not discharged
  • It shows a wider scope of security than you agreed upon was registered
  • A registration was filed against your company without your knowledge

It’s up to you to correct your security registration files by contacting prior lenders who can discharge the registrations. Do this well in advance of requesting new financing, as the process could take longer than expected. You may not be able to get new financing until the records are corrected.

How often should I do a search (& how much does it cost)?

Very few companies will conduct UCC or PPSA searches on a regular basis. Don’t be in the dark — even if you’re not looking for financing, it’s good practice to do this at least once a year, and it costs you nothing to perform the search.

Should every company do a UCC or PPSA search?

For new companies or start-ups, there might not yet be anything registered and outstanding. But if you’re an established business and have previously leased equipment or borrowed money or even rented premises in the past, there’s a higher chance that a security registration has been filed.

Do my personal records count?

Make sure you perform these searches for both your company AND yourself personally, as lenders may also look at your personal records. Luckily, in most jurisdictions these searches are easy to perform online through a service provider.

By checking on your records and following these steps, you’ll be able to mitigate delays in future funding and maintain your financial health.

For five more expert tips to improve your access to timely business funding, view the helpful eBook resource, “How to Become Lender Friendly.”