Frequently Asked Questions

What is business credit?

Your business credit record is the primary way that companies evaluate whether to do business with you—and on what terms. Companies rely on your business creditworthiness to make critical decisions, including whether:

to sell to you
to lend you money
you are viable as a partner
to lease the equipment you need to grow your business
to increase your line of credit
to help you carry more inventory at competitive prices
to give you favorable financing rates and terms
you stack up favorably against other companies competing in your market space

Why is business credit important to my business?

Good credit is the lifeline of your business. It enables you to obtain funding for things like expansion, capital expenditures, research and development, and staffing. It is the principal contributing factor to your business’s future growth, not to mention the cash necessary for survival. Good business credit also allows you to keep the cash you have to cover your cost of doing business; such liquidity lets you respond quickly to time-sensitive requirements, without halting or compromising operations.

It's not just about getting access to financing; business credit has increasingly become the primary vehicle for setting terms on business loans, determining insurance premiums, even setting lease payments. Good business credit can earn you lower rates, strengthening your cash flow.

What are the 4 C’s that companies look for?

A business’s creditworthiness is ultimately determined by what are known as the “4 C’s of Credit” -- character, capacity, capital and conditions -- most of which can be found explicitly or implicitly in a company’s credit report.

Character includes factors such as: size, location, number of years in business, business structure, number of employees, history of principals, appetite for sharing information about itself, media coverage, liens, judgments or pending law suits, stock performance, and comments from references.

Capacity assesses the ability of the business to pay its bills, i.e., its cash flow. It also includes the structure of the company’s debt—whether secured or unsecured—and the existence of an unused lines of credit. Any defaults must also be identified.

Capital assesses whether a company has the financial resources (obtained from financial records) to repay their creditors. In general, this portion of the credit report is the one most closely reviewed by the credit analyst. Heavy weighting is given to such balance sheet items as working capital, net worth and cash flow.

Conditions consider the external factors surrounding the business under consideration - influences such as market fluctuations, industry growth rate, political/ legislative factors, and currency rates.

A credit manager or loan officer will answer these questions by locating and reviewing:

requests for credit information
customer supplied information
bank information
trade information

What Are Tradelines?

Revolving credit accounts (aka trade lines) are credit accounts that have a specified limit with an open-ended term (ex. credit cards, home equity line of credit, etc.). Experts recommend that you have at least two installment credit accounts open at all times. Our revolving credit account is a fast and easy way to add available revolving credit to your credit reports.

Does The Credit Doctor guarantee their products and services?

Yes. The Credit Doctor offers a money back guarantee for all products and services It offers to its clients.

What's a business credit profile?

Your business credit profile is like your business ‘resume’; it contains critical information that other businesses use when deciding whether, and on what terms, to do business with you.

Like a personal resume you use to obtain employment, it’s important that the information in your profile is accurate, complete and timely. No one knows your business better than you. You might have a thriving and profitable business, but when doing business with others, often what matters more is what is documented in the credit report they receive on you. Most companies want a complete and unbiased view of who you are (and how risky it might be to work with you). The business credit scores and reports give companies that want to do business with you a fast, objective measurement of your credit risk.

You should think about your business credit profile in terms of:

What is in your credit profile? What is it telling other companies about you?
How do your current business credit scores affect the interest you pay on your existing loans? Did you get the best terms?
Have your scores improved enough to consider refinancing, or extending your credit lines?
Do new suppliers extend you favorable credit terms or ask you to pay Cash on Delivery (COD)? Are your competitors getting better terms for the same items?
Have you lost a deal because your competitor had better credit?

What’s in my business credit profile?

D and B Rating: an overall assessment of your business’s creditworthiness and viability

PAYDEX Score: a predictive indictor that measures the likelihood of your business paying within an agreed-upon timeframe

Credit Limit Recommendation: D and B's guideline as to how much credit should be extended to your business

Financial Stress Score: a measurement of the likelihood that your business will experience financial stress in the next 12 months

Can't I just use my personal credit?

If you’ve ever used a credit card, opened a bank account, or financed a car, you have a consumer credit file. Your consumer credit information is intended to help you find the money you need to run your household. However, not every business has a business credit profile, which is one reason why some creditors seek to check the consumer credit information of a small business owner. But if you want to limit your personal liability while running your company, it’s best to establish your business credit and use it to run your business. Using your consumer credit to get money for your business may cause some problems:

You may seem overextended. Because businesses require more cash to operate than consumers do, your personal credit will not be portrayed accurately if you are using it to run your business.

To prevent people from becoming overextended, consumer credit keeps track of how many credit or loan applications you make, most of which count against your consumer credit score. On the other hand, business credit does not count numerous applications for financing against you, since businesses usually seek financing on a regular basis as a way to run and grow the business.

Unless you are using the right credit information for the right purpose, you may be putting yourself into a situation where you will be unable to get financing – for your business or yourself – when you need it.