It’s time to give your credit report its annual checkup. If you find any bugs, kill ‘em fast so you can keep your business nice and healthy.

By C.J. Prince

Now’s the perfect time to do a hearty cleanup of your credit history. When was the last time you checked your credit report? Getting clean credit now means you’ll have more opportunities later. Even if you’re not currently in need of working capital, forecasting business cycles is always an imperfect science, so you never know when you’ll need a cash infusion—or when one of your potential business partners or vendors will decide to check your credit.

What you don’t know about your credit history can hurt you, so you should assess your credit before you even have a need for capital. “We get so many calls from entrepreneurs in distress because they were denied credit and they badly need working capital,” says Lathea Morris, cofounder of The Credit Alternative Group, a Montclair, New Jersey, company that helps small businesses and individuals gain access to capital. “One of the first questions I ask is, Did you check your credit report before you applied for financing? I would say that 80 percent do not.”

Now it’s easier than ever to get the facts. As of September 2005, thanks to the Fair and Accurate Credit Transactions Act, consumers in all 50 states can get their credit reports for free each year from each of the three bureaus—Equifax, Experian and Trans Union—by visiting www.annualcreditreport.com. Because your personal credit history is inexorably tied to your business, you’ll want to review all three carefully and pay to get your FICO credit score well in advance of needing capital. Fighting inaccuracies and repairing credit can take time, says Howard Dvorkin, founder and president of Consolidated Credit Counseling Services, a nonprofit financial counseling agency in Fort Lauderdale, Florida. “You’re not talking a few days; you’re talking a few months.”

Once you have all three reports, scan your personal information for accuracy. “Something as simple as two numbers in your Social Security number being inverted could eliminate your chances of getting credit,” says Dvorkin. Next, address any inaccurate late payments or charge-offs. Don’t be afraid to call creditors and ask them to remove one-time late payments. If you’re tenacious, “99 percent of the stuff can be removed,” says Dvorkin.

If you can’t have an item deleted, send an addendum to all three credit bureaus explaining the reason for the late payment. “It won’t improve your score or get [the item] off [the report], but when lenders review your credit profile, they can take that into consideration,” says Brad Stroh, founder and co-CEO of Bills.com and the Freedom Financial Network, a consumer debt resolution company in San Mateo, California.

Next, order your small-business credit report from D&B (www.dnb.com). For $140, you can get a comprehensive analysis of your business’s creditworthiness. For $349, you can sign up for one year of D&B’s SelfMonitor service and receive unlimited access to your business’s report, as well as e-mail updates notifying you of any changes. “A lot of vendors and business lenders will review that,” says Stroh, so you’re better off finding out the information before they do. And to keep your personal credit as insulated as possible, Stroh also recommends asking to have any personally guaranteed trade lines or credit cards transferred solely to the business once your company gets a few good years under its belt.

The bottom line on your credit review: Even if it doesn’t feel like a priority compared to the pressing tasks related to running your business, make it one. Getting a clear look at your company’s credit position today can help you not only address the past, but also plan more accurately for a successful future.

C.J. Prince is a writer specializing in business and finance. Reach her at cj@cjprincemedia.com.