Jun 27, 2013 Sean Albert
Credit report checking is a crucial component of regular corporate operations, as executives will need to know their standings to ensure smooth loan application processes, business valuations and much more. Many executives, as well as small business owners, rarely check their corporate credit reports, which could lead to a variety of issues.
One of the biggest risks of failing to regularly check credit scores is the threat of identity theft, as these financial documents are often the best way to identify oddities in accounts receivable or payable, as well as if fraudulent loans have been taken out. Regardless of whether risk is apparent, credit scores can empower decision-makers with more accurate portrayals of their finances.
Additionally, business owners who regularly check their credit scores will often be better positioned to work on attaining the highest ratings. Stronger credit reports can lead to the most competitive deals on loans, as well as better business valuations and overall standings.
Proactive trumps reactive
The Associated Press recently reported that many small business owners will only check their corporate or personal credit scores after being denied access to loans for which they applied. This is one of the more common ways that entrepreneurs will discover that their accounts have either been compromised or stolen, especially when the non-approval letter is met with surprise.
According to the news provider, when this happens, small business owners will be putting themselves in a bad position if they simply blame the bank for not approving their application. Rather, experts believe that entrepreneurs should focus on identifying what they could have done to improve their chances of approval, especially when it comes to raising their corporate and personal credit scores.
The source explained that the Great Recession led to a variety of new challenges for small business owners, especially regarding credit scores, as expenses have been generally low. When entrepreneurs are not regularly taking out loans, repaying the credit on time or making purchases, their scores will either remain stagnant or decrease.
The AP added that credit reporting officials urge entrepreneurs to regularly check their credit scores and do everything in their power to maintain or achieve the highest ratings possible. At times, alternative credit reports can be useful, as these documents can be used to identify more specific details related to financial standings.
Getting timely approvals
Fox Business recently listed several ways in which small business owners can improve their chances of acquiring traditional commercial loans, as well as those backed by the U.S. Small Business Administration. These very same tactics can also help entrepreneurs acquire loans more regularly through alternative lending resources.
The news provider explained that personal debts should be paid down to a minimum, as well as any outstanding credit from the business. Then, entrepreneurs should focus on researching and choosing the loans best suited to their specific financial needs.
Credit scores, either traditional or alternative, can make or break the loan application process for entrepreneurs, and these decision-makers can improve their lending prospects by regularly checking their standing.