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Making a mistake with your business credit can cost you in your credit score for months to years. While the formulas for business credit agencies are not as transparent or consistent as those for personal credit scores, there are still several big no-no’s that will stay on your record the longest. Here are the 3 biggest business credit mistakes you can make:

1. Liens
A lien is a legal claim against your company’s property or assets. It is usually the result of vendor or business loan repayment failure. Liens can be claimed by banks or vendors or even the IRS if you get behind on your taxes. Inactive liens can stay on your business credit report for at least 11 years. If your lien is tax related, you may be able to remove it earlier by taking advantage of the IRS Fresh Start Program.

2. Judgments
A judgment is a court-ordered lien against your firm for either failure to repay creditors or as a penalty if your business loses a lawsuit. Judgments are typically tied to a particular business property so that the other party has a claim to the profits when that property is sold. These type of credit mistakes can remain on your record for 7 years if they were paid and much longer if not.

3. Bankruptcies
Just as with personal credit scores, bankruptcies stay on business credit histories for roughly 7 – 10 years. A bankruptcy sends creditors and other investors the message that you are a huge financial risk, that you have gotten in over your head before so there is a chance it might happen again. The only way to clear this type of credit mistake is to wait it out and make smart credit decisions in the meantime.

While these big credit mistakes can hamper your business for a while, quickly rebuilding and making all payments on time will help prepare your business credit score for the days ahead.


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AND received FOUR free Business eBooks worth $39.95!
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