Once you start building business credit, the next step is to track your progress. Business credit monitoring allows you to see how the tradelines you open impact your business credit scores and ratings. With that knowledge, you can see what’s working and make adjustments to fast-track the process. But how does it work, exactly? Here’s a closer look at business credit monitoring and five ways it can benefit your small business.
What is business credit monitoring?
Business credit monitoring is an online service that allows you to track the information being reported about your business to one or more of the three main business credit bureaus—Experian, Equifax, and Dun & Bradstreet. These services typically let you view your business credit reports, view your credit scores and ratings, and receive real-time alerts about changes or new activity.
However, before you can monitor your business credit, you need to have at least one open tradeline reporting to a business credit bureau. Once you do, your credit report will be established with information about your open tradelines, payments on each tradeline, and legal events that affect your company, such as lawsuits, liens, and judgments.
5 ways monitoring your credit strengthens your business
Monitoring your business credit is important for a variety of reasons, from identifying potential risks to empowering strategic decisions. Here’s a closer look at five ways it can benefit your small business.
1. Catch fraud early
One of the most important reasons to keep close tabs on your business credit is to protect yourself against fraud. If a scammer gets hold of your business information and uses it to open a line of credit or loan, you’ll want to shut it down as soon as possible. With business credit monitoring in place, you can get real-time alerts about inquiries, new accounts, payments, and legal events. As a result, you can flag any unusual activities and investigate them right away. For example, imagine you’re going about your day, not requesting credit, and receive an alert that a new $10,000 business loan has been added to your credit file. You could then immediately report the account as fraudulent to the business credit bureau and contact the lender to get the situation sorted out.
2. Track your business credit
Once you set a goal to build business credit, it helps to have a way to track your progress and ensure you’re on track. Business credit monitoring allows you to see how your actions are impacting your credit ratings and scores. Access to that information can help you learn what’s working and what’s not, so you can adjust accordingly. For example, if you open a business credit card and max it out, the high credit utilization may cause some of your ratings to drop. However, by spotting that trend early through your credit monitoring dashboard, you could start paying off your balance before the billing cycle ends each month.
3. Compare your credit to benchmarks
Each business credit bureau has proprietary scores and ratings it uses to assess creditworthiness. When you sign up for business credit monitoring, you’ll be able to see how your business ranks across various benchmarks. For example, D&B has the PAYDEX score, delinquency score, failure score, and many more. Additionally, some credit monitoring services allow you to compare your credit scores and limits to those of companies similar to yours, which can highlight areas for improvement and competitive advantages.
4. Know who is inquiring about your business
One of the often-overlooked benefits of business credit monitoring is that it can notify you when someone pulls your business credit report. This information is valuable because it tells you who is showing interest in your company, whether it’s a lender evaluating you for a loan, a supplier considering extending credit, or a potential partner doing their due diligence.
By knowing who is inquiring, you can gain early insight into possible opportunities. That allows you to anticipate outreach, prepare your pitch or documentation, or even proactively get in touch. Additionally, it can help you vet potential interactions. For example, if a company you don’t recognize is checking your profile, it could signal a new player in your space or someone to research further.
5. Know what others see
Lenders, suppliers, investors, and other potential business partners may inquire about your business with one or more of the business credit bureaus. Understanding what they’re going to see can help you better prepare to enter business dealings with them. You’ll be aware of your strengths and can position yourself accordingly. Further, you’ll know whether you need to disclose anything upfront that they’ll see in the report.
Get started monitoring your business credit
If you’re going to work on building your business credit, monitoring your credit reports simply makes sense. It’ll help you prevent fraud, understand your progress, and prepare for dealings with third parties. At Lili, we’ve partnered with Dun & Bradstreet to make building business credit as easy as possible. You can open a Lili business checking account directly from the myD&B platform and sync your banking information, potentially impacting key D&B business credit scores. From there, you can monitor your business’s score through D&B Credit Insights, helping you stay up to date with your business’s credit-building progress.
Ready to take control of your business credit? Learn how Lili and D&B can help you build and monitor your credit with confidence!
