MCC mentioned in the Wall Street Journal regarding and I am quoted to explain our policy of checking personal-credit scores rather than business-credit scores. Business owners have the ability to submit their information to credit bureaus. This enables a potential client's own personal-credit score to be more reflective of their personal intent to pay back and why we at Mercantile value it more.

1. THURSDAY, MA RCH 18, 2010
When Business Credit
Scores Get Murky
Even Owners With Stellar Records Face Rejection for Financing as
Banks Rely More on Cash Flow and Collateral - by emily maltby
Credit scores are often touted as the make-it- Many owners have already poured energy into
or-break-it factor for business loans and credit establishing business credit, which is no easy task.
lines. But even entrepreneurs with high business The Federal Trade Commission provides informa-
credit scores may have trouble getting financing. tion for consumer credit reports, but there are
This is partly because business-credit scores— few such resources available for corporate credit
as well as personal-credit scores—have become a reports, which are riddled with reporting excep-
weak indicator of repayment ability, at least in the tions and inconsistencies.
eyes of some large lenders. Take vendor credit lines, for example. Some
“It’s a lagging indicator,” says Kathie Sowa, vendors are prone to submit data to the bureaus
a commercial banking executive at Bank of only in the case of delinquent payment, while
America Corp. “We are underwriting more on a other vendors may not submit at all.
traditional basis. We look at the full picture,” she It’s a similar story for traditional lines of credit.
says. Some bank lines won’t appear on any report
Some of the metrics Bank of America prefers unless the business defaults, in which case those
to rely on include cash flow and collateral to deter- carrying a personal guarantee may blemish only
mine a business’s creditworthiness, she says. the owner’s personal score.
Mercantile Capital Corp., a non-depository Diligent business owners have had trouble
lender in Altamonte Springs, Fla., that specializes navigating all these variables, making it tempt-
in commercial real-estate loans, also doesn’t give ing to use advisory services. But owners must be Cortera, says such a request will unlikely be grant-
much weight to business-credit scores, which cautious when seeking paid advice, as the Credit ed if the business is too young, lacks solid credit
many entrepreneurs establish in the hopes of Repair Organizations Act only protects consumer up to that point, or has not hit at least $5 million
strengthening their position to secure financing. credit reports against scams. in annual revenue. He adds, however, that owners
Mercantile’s chief executive, Chris Hurn, says “The general attitude is that businesses can may have luck if they “know a local community
those scores may not be objective, given that busi- look out for themselves more than individual con- banker who will do it more on a handshake.”
ness owners can submit their own information to sumers,” says Ms. Detweiler. “But that doesn’t Heeding that advice is Shelly Osterhout,
certain credit bureaus. mean small businesses aren’t a target for potential president of Computer Specialists of America Inc,
Mercantile, however, does look closely at an fraud.” in Fort Myers, Fla., who has tried to keep her per-
owner’s personal-credit score because it “reflects Ms. Detweiler stresses that no service can sonal finances and business finances as separate
the character of the person you’re dealing with,” guarantee a higher score. Owners should check as possible.
Mr. Hurn says. “They say not whether they can with the Better Business Bureau before paying Last fall, Ms. Osterhout noticed that her two
pay back, but what their intent is to pay back.” any credit consulting company. Capital One business credit cards appeared on
Banks such as Mercantile can often gain all Some credit bureaus, such as Dun & her personal credit report, dinging her personal
pertinent information without the business-credit Bradstreet Inc., offer expedited credit-repair and credit score. She later found that Capital One
score. Business owners’ personal and business credit-building services for a fee, but some of the had changed its reporting policy and now ties its
finances are usually intertwined and business steps the agency takes in providing those services credit-card lines to the owner’s personal report.
lines of credit that carry a personal guarantee can be done for free, by request of the business Today, Ms. Osterhout’s business is looking to
often show up on personal reports. owner, experts point out. expand. She would like a $50,000 to $100,000
But Gerri Detweiler, a personal-finance To build business credit without paid assis- credit line and is trying to find a lender who won’t
adviser at Credit.com Inc. in San Francisco, tance, owners should keep on top of their vendors submit information to her personal credit report.
reasons that even if high business-credit scores to know if and when they submit information to “I’d like to find a lender that is willing to
are unlikely to be the defining factor in procuring the credit bureaus. look at business as a business entity…instead of
credit, they can help get the process started on the At the bank, they should negotiate for credit co-mingling my personal finances with my busi-
right foot. What’s more, poor credit scores can be without a personal guarantee. ness,” she explains. “It’s unfair to our businesses
detrimental. Alex Coté, spokesman for the credit bureau as well as our families,” she says.