If you are an owner or manager of rental units you should be familiar with credit reports to help find the best tenant for your property. As a landlord you know how much trouble a bad tenant can be, especially if they have misrepresented themselves.
Now business credit reports can tell you a lot about the company or people you are hiring. You need to have up to date information when extending credit or hiring your home improvement contractors or tradesman.
Take the Risk Out of Hiring
Credit scores are also called risk scores because they help you predict
the risk of the company or individual you hire.Your credit report will show you:
Number and severity of late payments
Type, number and age of accounts
Total debt
Public records
You can take the risk out of the experience with a business credit report. Be sure you hire:
A professional and a good manager of money or you may find yourself with incomplete or faulty work as they fail.
Business reports help identify people who are mis representing themselves.
Public records: This section of a business report will show you how honest their business practices are.
Why Do I Need It?
Checking background is a necessary part of doing business today because identity theft, poor business management and outright fraud is costing us over $600 billion today.
Establish Credit Criteria
Business credit scores range on a scale from 0 to 100 with 75 or more considered an excellent. You can go to the Experian site and find the average score for your area and use that as a guideline. Develop a set of business rules, establish criteria and automate your hiring process. These days, checking out who you do business with is a must.
When considering a General Contractor or other tradesman for your home improvement we have put together a simple set of guidelines to help you be sure your experience is a safe one.
Some Basic GuidelinesUse a valid driver's license or other picture I.D. to help confirm visual identity. Use the drivers license to confirm the birth date
Social Security: A warning indicates either a bad entry or an identification problem. Ask for some other documentation that confirms the social security number such as tax returns. Your business report will confirm social security. Hire no one whose social security doesn’t match.
Trade lines: The codes that credit reports use may vary from company to company but there will be an indication as to the type of loan. Mortgage loans should be high and will skew this ratio. You should allow for this because home ownership is a plus. Be aware of too much debt, it can be the cause of a business failure that kleaves you with half a project when business’s fail.
Public Records: This area contains federal district bankruptcy records and state and county court records of tax liens and monetary judgments. You should look carefully into this area, serious monetary difficulties are a sign of trouble.
Recommended Procedure
Use the directory: Find a contractor by linking through to the data base of professional trade organizations web sites and use professionals that have committed to ongoing education.
Workmans Compensation Insurance: If something goes wrong its nice to know that your hire has insurance and that his workers have coverage in case of an accident. If there is no workmans compensation and there is an accident, you may be responsible for the payments to injured workers. Require it and get proof by asking for the policy page with the name of the company and the expiration date of the policy.
Require a General Liability Policy: Without this type of Insurance the building has no protection. Workman's Compensation protects workers NOT Your Property. Require it and get proof by asking for the policy page with the name of the company and the expiration date of the policy.
Do not be mislead by a business card or number on a contract and take that as proof that a contractor is licensed. Always call before you sign anything. In addition to the license, also verify the business address and telephone number of anyone you are considering employing.
Business Report: Always get a business report on the company; it is your assurance that the people you hire are going to give you a good experience. For the cost of a business report on everyone you hire; from the general contractor, plumber or roofer to your architect or home designer. Avoid fraud, bad business practices that can cause you years of grief and court costs.
