Business Credit Bureau

Whenever you deal with another business you need to know if it is creditworthy. If you are selling to a business you need to know that you will get paid. If you are ordering from them, you need to know the business is reliable and won't go bust with your money before they actually deliver.

That might not be so important for small orders and jobs. But with key customers and suppliers, it's vital. Often, the collapse of one company drags a number of its suppliers down with it.

You can check out businesses by using a business credit bureau. There are a number of these bureaus in the US, of which Dun & Bradstreet is the best known.

The bureau collects information about businesses, and will give each business a rating, from 0 (very bad) to 100 (excellent). Generally, a score of 75 or above indicates good credit quality.

Some of the factors that affect a business's rating include the amount of debt that it has outstanding, and its record of payments on that debt. If a business misses its payments on bank debt, how likely is it that it will pay you on time?

This doesn't mean that you should not deal with businesses that aren't on the credit bureau's list or that have a poor rating. But you should give some thought to how to limit your exposure, perhaps by asking for part payment in advance, or (with small businesses) for the owner to advance funds from their personal credit card rather than using business credit.

If you operate a business you should also give some thought to your own rating with the credit bureaus. Sometimes, businesses don't get the loan they want simply because they are not registered with the bureaus. If you have usually dealt on a cash basis and haven't borrowed money from a bank to start your business, you might not be on the register.

For personal credit, your information goes automatically to the credit bureau. For business credit, the business needs to send it to the bureau voluntarily. You can help the bureau by encouraging the bank that you deal with to report their payments experience to the bureau.