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How Will A Credit Rating Agency Affect Your Business?

Jan 22, 2008
A credit rating agency is one that ranks corporations and their credit worthiness. For those that own their own business, this information is very important. It is going to be accessed to determine if you are eligible for various forms of corporate credit. At the same time it is going to determine how much you are eligible for and the rate of interest you have to pay.

In order for you to have a good idea of your rating, turn to a non profit credit rating agency. They will provide your with your business information without any fees. They will also consult with you to explain what it means. They want you to have the knowledge so you can go out there and get the corporate credit you need for your business to be successful.

You will also discover there are credit rating agencies that are independent as well as some ran by the government. All of them work with lenders to give accurate information. Make sure you don't falsify information when you submit an application for corporate credit. They are going to get all of it anyway from these resources. Attach information if there will be questionable information they come across with this process.

You want to do all you can to represent your business in the best light. Getting the credit you want is very important. At the same time you need to be concerned with getting as low of an interest rate as you possibly can. This is going to save you substantial amounts of money down the road.

For businesses, the credit rating is calculated differently than it is for personal credit. Instead of a number there are letters assigned. AAA means outstanding credit and very low risk. A company can also be AA, A, BBB, BB, or be to show they have a good credit history. Those with C's and D's are less likely to get corporate credit at a good rate. When you get into the D categories the credit may not be extended at all.

There are plenty of people that criticize the way the credit rating agencies classify a business though. The way they have their debts structured can give a very unrealistic picture of their overall creditworthiness. As a result of this some companies get credit when they shouldn't. By the same token some businesses will find it hard to get corporate credit even though they are doing well financially.

There are only three major credit reporting bureaus for personal credit. However, there are more than 100 credit rating agencies out there for businesses. Most lenders only work with a handful of them though. As a result these agencies strive to always provide very accurate information. They know if they don't the lender may drop them and work with someone else.

You should take the time to find out what your rating is with various credit rating agencies. This way you can figure out your options for applying for corporate credit. You can also help to resolve any problems with your rating. Since inaccurate information can prevent you from getting the credit you deserve, you really need to look into this on a regular basis.
About the Author
Robert Bain - veteran business owner shares his thoughts on building corporate credit, even if you have bad personal credit. Visit href="http://www.corporatecreditpower.com">CorporateCreditPower.com to read more.
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