May 15, 2019
By: Shannon Abnal, NACM Commercial Services
I was talking with a member recently who was disappointed in the credit report he pulled on a customer. The credit report showed a couple of tradelines which indicated the customer to be prompt in payment history. He called the customer “a habitual slow-pay and a royal pain in the side.” He may have used another word to describe where the pain was, but we’ll keep it G-rated. He wanted to know why the credit report didn’t match up to his own experience with the customer. I explained tradeline data on commercial credit reports, regardless of the source you are obtaining them from, is only as good as the information shared through the data contribution process. Credit reports are an excellent source of information, but cannot display what isn’t shared. I pointed out his firm was not a data contributor. He had important knowledge about the customer’s payment habits which wasn’t being shared with the credit community. If his information was added to the credit report, would it paint a different picture of the debtor which more closely resembled his experience? I told him the same concept applies to prompt-paying accounts as well. What about doing his best customers the favor of improving their credit rating? How could his experience, good or bad, help other firms make a better credit decision?
Obtaining a commercial credit report these days is so fast and simple, it feels like they are magically delivered. We sometimes forget where that information came from. Credit reports are created through hard work and the generous contribution of credit data from member firms. Slow and steady, month after month, payment experience contributed becomes the tradelines on the credit reports.
If your firm is not contributing, what part of the story might be missing from your customers’ credit reports?