As part of our mission to make money smarter, BILL reports customer credit performance to the Small Business Financial Exchange (SBFE®). That means you can use BILL to build credit history and credit score for your business simply by paying on time.
What is credit history and why is it important?
Your credit history tracks your history of paying off debts. This can include information about how much debt you are carrying and how often you make payments on time.
A good credit history will show that you only have a small amount of debt and you consistently make payments when they are due. Bankruptcy and foreclosure will have a negative impact.
By looking at your credit history, potential creditors can decide if you are likely to pay back your debts in a timely manner. Those with stronger credit may be able to borrow more money, or negotiate a better repayment plan.
What is the Small Business Financial Exchange?
SBFE is a nonprofit trade association that gathers and protects the largest aggregation of small business payment data in the U.S. It’s not a credit bureau and doesn’t provide credit scores or credit reports. Governed by the small business lending industry, the association makes business data available for approved Certified Vendors.
Who are SBFE Certified Vendors?
According to SBFE, “Certified Vendors must undergo a rigorous certification process and ongoing oversight designed by the industry in order to receive this designation.” Certified Vendors include Dun & Bradstreet, Equifax, Experian, and LexisNexis Risk Solutions.
Dun & Bradstreet
Dun & Bradstreet was the first certified vendor for the Small Business Financial Exchange beginning in 2014. The predictive data from Dun & Bradstreet helps the SBFE provide credit solutions for businesses, credit providers, and underwriters.
Equifax provides “financial, non-financial, and consumer data-based solutions” for commercial vendors to provide new business opportunities, mitigate risk, and encourage new business growth.
Experian’s mission is to provide a more clear and holistic view of small business health to benefit businesses and credit providers alike. The Experian Security First program ensures rapid and high-quality customer service and airtight security for sensitive financial data belonging to businesses, institutions, and individuals.
LexisNexis Risk Solutions
For LexisNexis, it’s all about minimizing risk for small businesses. LexisNexis aggregates data from banks, trades, consumer data, and more to create credit scores and various reports that inform small business strategy. These reports include predictive scores and a wider range of coverage so you can increase your market share safely.
How do Certified Vendors get and use your data?
As an SBFE member, BILL reports your balances and payments to SBFE monthly. Other SBFE members who access and report small business data include the 10 largest U.S. business card issuers and 12 of the top 15 commercial lenders.
Through the SBFE Data Warehouse, the association securely shares your data with Certified Vendors, who combine your BILL account history with data reported by other SBFE members and public data to create a credit report and credit risk score for your business.
SBFE members—including banks, credit unions, credit card issuers, and other lenders—rely on data and analytics from Certified Vendors to offer loans or extend credit to small businesses. SBFE data represents more than 38 million small and micro businesses dating back to 2001.
Is SBFE data secure?
Business data reported by BILL and other financial institutions is reported through the SBFE Data Warehouse where it’s securely stored and protected from any use outside the intended purpose.
What helps build business credit history?
If you’re a small business owner who started your operation using your personal credit score–you’re not alone. It’s a common and useful beginning for small businesses, but it’s time to begin building business credit history in the name of your company.
- Make your business official: It’s time for a business name, dedicated phone number, business bank account, and credit profile. This means getting a phone number that is not an owner’s personal phone and registering it with the directory in your city, county, or state. Open a business bank account in your company’s name and begin using it to pay bills and vendors.
- Get a business credit card: Your credit file is initiated once you open a line of credit. For most businesses, the quickest and most useful way to achieve this step is to get a business credit card. Start with one, and consider adding one or two more as your need grows. You should always keep a manageable balance on the card and never miss a payment.
- Work with reporting suppliers: Not all suppliers and vendors are required to report payment histories to a credit bureau. Choosing to work with a supplier or vendor who does report these payment histories can help to establish business credit.
- Get incorporated: Transitioning your business to an LLC helps to separate personal credit from your business credit. This can simultaneously improve both scores and protect you and your business.
- Pay on time: It’s far too easy to fall behind on payments, or to accidentally pay a day late. Unfortunately those mistakes can injure your credit. Create processes that allow you to pay on time, no matter what.
- Monitor your credit: Once your credit file has been created, you need to watch it carefully. If you notice any incorrect data, you can dispute it with a credit bureau. Catch errors quickly and be sure that your positive payment history is being reported accurately.
Why do I need to build business credit?
Your business credit score signals to economic partners whether it is safe and lucrative to do business with you. A low credit score can hurt your opportunities for partnerships, growth, and beneficial terms on deals and loans.
A strong business credit score can help you:
- Secure financing
- Get better interest rates & loan terms
- Decrease prepayments
- Establish better trade deals within your industry
These factors help businesses save money, improve cash flow, seize opportunities as they come, and grow at a healthy rate. Additionally, establishing a strong business credit score can shift the financial focus from the business owner’s personal credit, which is often used to get a business up and running. A business credit score helps create greater stability and take the pressure from a business owner’s personal score.
BILL helps you build business credit
We are committing to help all businesses spend smarter, whether that’s through smarter budgeting or using our smart cards to boost your business credit scores while you make normal business purchases. With our updated D&B credit reporting you can use BILL to improve your business with every swipe of the card.
Find out more about BILL Spend & Expense by signing up for a demo today.