Can I run a credit check on a B2B customer before extending payment terms?
Can you run a credit check on a B2B customer before extending terms?
Short answer
Yes. Pulling a business credit report on a B2B customer (Dun & Bradstreet, Experian Business, Equifax Business) is not regulated by the Fair Credit Reporting Act and does not require the customer's consent — those are commercial records, not consumer reports. The line you have to watch is when you also want the owner's personal credit pulled (a sole proprietor, or anyone signing a personal guarantee): that is a consumer report under FCRA and requires both a permissible purpose and written consent.
The Fair Credit Reporting Act governs consumer reports — files held about individual people and used for credit, employment, or insurance decisions about those individuals. It does not govern business credit reports, which are commercial records about an entity's payment behavior, public filings, and trade references. So pulling a Dun & Bradstreet Paydex score, an Experian Business Intelliscore, or an Equifax Business Credit Risk score on a customer before extending terms is unregulated at the federal level. You do not need the customer's consent, and you do not have to issue an adverse-action notice the way FCRA requires for individuals.
A typical business credit report shows years in business, public-records hits (UCC liens, judgments, bankruptcies, tax liens), trade-line history reported by the company's vendors (paid-on-time vs days-beyond-terms), industry-risk flags, and a composite score. The accuracy varies. Small private companies often have thin files, and the score can swing on one or two reported trade lines. For a service business deciding whether to extend $5,000 in net-30 terms, a business credit report is a useful filter, not a substitute for asking for trade references directly.
Where you cross back into FCRA territory is when the B2B counterparty is a sole proprietor, a young LLC, or any structure where the owner is going to personally guarantee the obligation. If you want to pull the owner's personal credit report to make the decision, that is a consumer report, and FCRA section 604 requires a permissible purpose. The cleanest path is written consent — a signed credit application that authorizes the pull — and being ready to issue an adverse-action notice if you decline to extend terms based on what came back. Pulling without consent is real exposure, with statutory damages on the table.
For most service businesses the practical rule is simple. New B2B customer over your trade-credit threshold (often $1,000 or $2,500): pull a business credit report and check the public-records hits. For terms over a higher threshold, or for an LLC under two years old with thin file coverage, add a credit application with personal-guarantee and consent language, then pull the owner's personal report. Below the threshold, run on net-15 or deposit-required for the first invoice and let payment behavior tell you what credit reports cannot.
Syntharra does not pull credit reports — that is a decision-stage tool, and we sit downstream of it. We come in after the invoice is issued and overdue. The credit check at decision time and the day-3 call work together: customers who pass a credit check are the ones who usually just forgot, and the day-3 call recovers most of those without escalation.