Business credit reports can be used to keep tabs on your own company’s credit, to maintain a sense of whether lenders and other businesses will extend credit to you, and to help prevent fraudulent activity.

Start by getting a copy of your company’s credit report. The three major credit bureaus, Experian®, TransUnion®, and Equifax®, will provide a copy for a relatively small fee.

(Contact information is provided at the end of this article.)

Once you have a copy of your credit report, start by ensuring that the information contained in the report is accurate and up-to-date. Why? Other businesses and lenders may use your report to:

  • Decide whether – and how much – credit to extend to you
  • Determine the terms of that credit – loan or credit term, repayment period, etc.
  • Determine what interest rate to extend
  • Determine what insurance rates you will pay

If you find inaccurate information, follow the credit bureau’s instructions for cleaning up your credit report. The credit bureaus are required by law to investigate your requests for verification and validation and to remove information that is incorrect (or that creditors simply decline to verify in a timely fashion).

Cleaning up inaccurate information – especially information that is harmful to your overall credit rating – is important, but so is checking for loans, accounts, or business relationships you were not aware of. If employees have the authority to establish credit with another business, make sure you understand the purpose of that credit and would authorize that relationship. Otherwise, you may be paying for products or services that you do not want – or didn’t even receive. Similarly, you may have business credit cards that you did not authorize.

Sound farfetched? Suppose one of your employees decides to embezzle from your company. He establishes a credit card account in the name of your business. He purchases goods and services, and every month the bill is paid, even though those goods and services were not used for company purposes. You may never notice the problem, especially if your company purchases a wide variety and amount of goods and services through many different credit and vendor accounts.

On the other hand, if you check your credit report, you may notice the account and realize you never authorized it.

In short, think of your company credit report as a further accounting department check and balance system, serving as a quasi-third-party audit.

Keep in mind that others may also attempt to defraud your company. Identity theft occurs not only on an individual level, but also at a business or corporate level. Anyone who has access to your company’s contact information, account numbers, and other information – whether they are employees or people outside your company – could steal your corporate identity in an attempt to commit fraud.

What could happen? Here are just a few of the possibilities. Corporate identity thieves could:

  • Access names, bank account information, and other sensitive information of your company and your employees.
  • Order products online using stolen credit cards or bogus account information (like fake purchase-order numbers).
  • Establish merchant accounts in your company’s name, accepting purchases on those accounts, and then disappearing, leaving you to deal with angry, defrauded customers.

To help prevent identity theft and misuse of company credit, maintain effective accounting and purchasing procedures and check your company’s credit report regularly. If you see suspicious activity, investigate immediately – and if your company’s identity has been stolen, notify your banks, vendors, and the credit bureaus immediately.

To contact the major credit bureaus for a copy of your company’s credit report:

Equifax
P.O. Box 740241
Atlanta, GA 30374
800-685-1111
www.equifax.com

Experian
P.O. Box 2002
Allen, TX 75013
888-397-3742
www.experian.com

TransUnion
P.O. Box 390
Springfield, PA 19064
800-916-8800
www.transunion.com

The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice.

This communication contains references to specific third-party trademarks, products, and services. Such reference is for general informational purposes only and the third-parties are not affiliates of Nevada State Bank. Nevada State Bank does not claim any ownership or exclusive rights to the use of these marks.