Down the street from my office is a guy who seemed to run a thriving art and antique business. The place was always chock-full of knickknacks and doodads and people.
Careful readers will notice that I said that he “seemed” to run a great business. In fact, he most certainly did not. Last week, I read a story in the paper about him, stating that apparently, he had many things in the store on consignment, had failed to pay various owners after the consigned pieces sold, and the State was investigating. Then, yesterday, I saw an eviction notice on his door.
It will take years for him to dig out of a mess like this and the chances of him repairing his business credit anytime soon are practically nil.
But what about the rest of us? Most people have a few negative things on their credit report, even if they strive to pay their debts on time. Especially because of the economy the past few years, late payments have cropped up on many business and personal credit reports.
The trouble with that is that bad credit, of course, affects your ability to get more credit, or at least cheap credit. It can really hurt your business’ ability to grow. So it would behoove the smart small business owner to check out his or her credit reports and remove whatever negative information possible. The good news is that it actually is not that tough to do.
1. Pull both your personal and business credit profiles: Business credit profiles are often handled by Dun & Bradstreet. Business credit may also be profiled on the same reports that handle personal credit profiles:
To get a copy of your free personal credit report, go to FreeCreditReport.com. For your business credit (using your EIN), pull your D & B credit report.
2. Check for mistakes and outdated material: By law, most items listed on your credit report cannot be there beyond 7 years. So if some old, negative items are showing, mark them. Similarly, if there are inaccuracies with regard to amounts, or addresses, or even spellings, mark those too. Everything on these reports should be 100% accurate. With a billion pieces of new information being reported every month, mistakes are made, often.
3. Challenge the mistakes: Write a letter challenging every error. By law, a credit agency has 30 days to verify the information on the report or delete it. Be able to back up your assertion as to why the debt is wrong, or does not belong to you, or whatever. If the item is wrong and still remains, challenge it again. And again. It will eventually drop off.
4. Talk to the creditor: As to those items that are accurate, albeit negative, the trick here is to contact the original creditor and try and work out a settlement. Agree to pay the amount due if they agree to contact the credit agency and remove the ding once the debt has been paid. The creditor would rather see the money than continue to hurt your credit, so they should go for it.