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Credit Scores: Expectations vs. Reality

August 18, 2021
Business
Credit score

As a business owner, you know how important your business and personal credit scores are. When you get a large purchase order, a high score can mean having access to affordable working capital to easily fulfill it. A high score can mean having access to a loan to invest in new technologies, instead of becoming an antiquated dinosaur with slowly deteriorating profit margins.


Many business owners, however, expect that by making all payments on time, their business credit scores will be perfect when it comes time to apply for that loan. So they focus on timely payments and may not bother even checking credit reports. Yes, a strong history of on-time payments is paramount to having a great credit score.

However, the reality is that even if you have a timely payment history, you have to get your hands on copies of your credit reports and credit scores on a regular basis, even before you need them for a loan application.

Here are three reasons why your expected credit score may be different in reality:

1.Errors and Mistakes

There may be erroneous information on your credit report lowering your credit score. As the exact calculation of your credit score relies on many factors, items that may seem unimportant may actually be of consequence, such as industry codes. So even if an error seems like not a big deal, go ahead and resolve it through the credit agency’s dispute resolution processes. Other errors might not seem so small - like loans that have not been marked as paid off even when they have been. Definitely resolve these immediately. 

2. Fraudulent Activity

Sometimes bad actors and fraudulent activity cause an otherwise good credit score to be lower. Some signs of fraud include: a line of credit that your business never applied for, incorrect personal information or social security/employment identify numbers, past due payments where none are expected, and hard inquiries that you never made. These are obviously very serious problems to have, and you may never learn about them if you do not check your credit reports.

3. Surprising Credit Calculations

It is obvious to most business owners that paying bills on time is essential to having healthy credit scores. However, there are less obvious elements that are just as important. Your credit report will often give short reasons why the credit score may be lower. Some of these reasons could include:

  • Insufficient credit history. If your business has not been using credit products for very long, your business simply may not have a sufficient credit history to get a high credit score. Do not worry, CreditPush can help you build a credit history even starting from zero.
  • Insufficient credit lines. If the total limit of all of your business’s credit lines combined is not much, this will also negatively impact your credit score. Similarly, not having enough separate credit lines can also be an issue. It can be surprising to learn that not borrowing enough money can lower your credit score!
  • Liens. Sometimes, a lien could be put against your company without you even knowing about it. A lien is a legal claim by a creditor to property, and depending on the details, can be a significant red flag to a potential creditor! Reviewing your credit reports can help you identify any outstanding liens so that they can be resolved asap. 

When you can check your credit score for free using CreditPush, there is every reason to find out whether the reality of your Credit Score matches your expectations. Whether or not your credit score holds any nasty surprises, have no fear - we will help you improve it, step-by-step.  When the time comes and you need an infusion of capital into your business, we will even identify and apply to new credit products on your behalf. 

Sign up to be a beta tester for CreditPush today. The first 1000 beta testers will have free access to all beta features for life! 



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