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According to D & B's (Dun & Bradstreet) Small Business Group, many small business owners are not aware of the importance of managing their business credit. Just as a consumer would be concerned about his/her personal credit score when applying for a personal loan, small businesses should be aware that the business credit rating influences their business loans, credit terms, insurance costs, and lease rates—things that could literally dictate how slow or fast their businesses grow. D & B Small Business Group suggests the following for managing business credit:

1. Start a Business Credit File; Get a DUNS Number. Small business owners should first know if they have a business credit file with D & B or any other commercial database. If a small business doesn’t have a credit file, they should establish one. They should apply for a DUNS number, the unique identification number, as soon as they start their new enterprise. Also, they should ensure that all information in their credit file is accurate so that others (vendors, suppliers, financial institutions etc.) making decisions based on the file are doing so in light of complete information that accurately portrays the status of their business.

2. Establish a Credit History. Small businesses should establish a credit history by putting expenses (such as a business phone line) in their business name and using a commercial bank account to pay their bills. In this manner, they’ll build up a history of payment behavior that will help them establish favorable credit terms with future business partners.

3. Pay Bills on Time. In order to improve their credit scores and build a positive history, business owners should pay their bills on time. Obviously, small businesses needs to be very careful of overextending themselves, and should use any line of credit judiciously.

4. Monitor and Understand the Credit File. Small businesses should actively monitor their credit file. D & B finds that the credit score of about one in three businesses declines over just a three-month period. It’s critical to know about any change in the credit rating before it affects relationships with customers, suppliers, and financial institutions. Businesses should keep their credit file current and accurate, reflecting all changes such as address change, number of employees, outstanding suits/liens, revenues, etc. 

5. Monitor a Customer’s/Vendor’s Credit Report. Small businesses can improve cash flow by knowing the credit standing of business partners before agreeing to payment terms. Credit reports that provide a clear and complete picture of the credit standing of their customers can help small businesses determine how much credit, and on what terms, they should extend. Also, small-business owners can find out a potential customer's PAYDEX score, which reflects that company's past payment history and trends, and indicates how willing that company is to pay its obligations. HBM

Source: Dun & Bradstreet