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What factors influence my Business Credit Rating?
Home » Accounting » Business Credit Rating » What factors influence my Business Credit Rating?The most obvious factor, of course, involves your ability to consistently repay those businesses that choose to extend you credit (and then choose to pass along that information to a business credit bureau). Most business credit bureaus operate on a weighted scale, which means that larger transactions carry greater weight. Consistently paying late on a $2,000.00 debt, for example, is less devastating than consistently paying late on a $20,000.00 debt. In addition to straight payment histories, there are some other important factors that comprise the business credit rating provided to your potential creditors. The factors listed below aren’t exhaustive, but should give you at least a general idea of the types of things that influence your rating:
• Percentage of payments within terms: This is particularly important within the Dun & Bradstreet scale, and it involves a weighing of the percentage of your creditors that receive their payments on time. Most of your potential creditors will expect that at least 60% of your creditors receive their payments on time.
• Collection issues: Your rating will be negatively impacted by the listing of any accounts which a creditor has chosen to place in collection. Even if you’ve reached some sort of agreement with the collection agency, the fact that the account is in collection is a significant strike against your business credit rating, so you’ll want to remedy that problem as quickly as possible.
• Suits/liens: Tied to collection, the existence of a suit on a delinquent account or, even worse, a lien encumbrance resulting from a judgment can also prove a substantial deterrent to any creditor who investigates your business credit rating. Potentially, at least, you can explain away a suit as frivolous, but the listing of a lien or judgment is something you’ll want to avoid if at all possible.
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