Can online reviews on sites like Yelp or Google affect your business credit scores, or the ability of your business to get financing? The answer may surprise you. 

Here we’ll unpack how online reviews can affect your business credit— and your business overall— and strategies you can use to bolster positive reviews. 

The Importance of Trust

You probably already know that it’s in your best interest to earn and maintain the best credit scores possible – both personally and for your business. There’s no question that a good business credit score can open doors to opportunities and save you money at the same time.

As a small business owner, customer reviews can also play an important role in the health of your company. According to a recent survey, 98% of consumers check online reviews before deciding whether to do business with a local company. Good reviews can help your business to thrive and grow. An overabundance of negative reviews, however, could have a damaging effect.

Ways Your Business Credit Could Be Affected by Your Online Reputation

Just as word of mouth or a viral video can spread quickly, online reviews can significantly impact a business in many ways. 

Your online reputation can affect your business in several ways:

1. Sales 

Reviews can have a direct impact on how much money your business brings in. As mentioned, many customers often rely on reviews to make decisions where to eat, where to stay or what to buy. Positive reviews can lead to increased sales, while negative reviews may lead to lost sales.

Even local businesses that rely on foot traffic may miss out on customers due to bad reviews. 

2. Search Engine Rankings

If your business relies at least in part on people finding your business when they search online, keep in mind that reviews can affect your SEO, or how your business shows up in search results. 

3. Feedback & Market Research 

“Online reviews make up one aspect of a business’s reputation but they are direct feedback,” points out Jordan Power, president of marketing firm Grey Smoke Media. “With every negative review, a business should see it as an opportunity for growth. Think of it like a sinking ship. You learn to plug the holes.” 

You can use reviews to help understand how customers interact with your product or service, and that can help you make improvements.

4. Credibility and Trust

Positive reviews can provide credibility and social proof. They can create trust with new customers. This is especially important for bigger purchases, but even with small purchases people often want to hear about other people’s experiences. 

5. Employee Morale

It’s hard for someone to enjoy working somewhere with unhappy customers, but positive reviews can help your employees feel good about their employer. 

6. Financing and Credit

Online reviews may impact business credit in specific ways. They can also affect your businesses’ ability to get investment capital, crowdfunding or even financing. 

Reviews and Business Credit Scores 

Before we dive into how online reviews may affect business credit scores, let’s pause here for a little myth busting. Your business doesn’t have just one credit score; it has many scores. The same is true of personal credit scores as well.

Numerous companies create and sell different versions of business credit scoring models. Lenders use these models to generate commercial credit scores – numbers used to predict the risk of doing business with your company. The higher your business’ credit score climbs on a scoring model’s scale, the more likely it is to pay its bills on time (and the lower the risk your business represents to lenders).

When compared with business credit scores, your personal credit scores may be a little easier to understand. Consumer credit scoring models created by FICO or VantageScore are designed to consider the information found on one of your personal credit reports from the major credit bureaus. They take into account whether you pay your bills on time, debt and credit utilization, new credit, types of accounts and inquiries. Social media information isn’t collected by consumer credit reporting agencies, and isn’t a factor in consumer creditworthiness.

When it comes to business credit reports, your business’ payment history on tradelines like business credit cards, small business loans, and vendor accounts has the biggest impact on your company’s credit rating. (For example business credit bureau Dun & Bradstreet’s Paydex score is based 100% on your business’ payment history.) 

Negative information like liens, collection accounts or late payments that appear on your business credit reports are a high indication of credit risk, and will hurt your business credit scores. 

While business credit scoring models are heavily weighted toward financial information, they may also take into account others information such as:

• Online Reviews
• Whether a Company’s Number of Reviews Is Trending Up or Down
• Responsiveness to Customer Reviews
• Business Age
• Date Incorporated
• Number of Employees
• Annual Sales

Why Do Lenders Care About Business Reviews?

Business lenders care about customer reviews only to the extent they can help predict the risk of extending credit to your company.

Business lenders need to avoid loaning money to companies who won’t pay back their debts as agreed in order to maintain a healthy cash flow and remain profitable.

Credit scores that consider online reviews can give commercial lenders an enhanced way to track and reduce their exposure to risk. According to Experian, online reviews, rankings, and ratings “can all shed light on a business’ health, growth, and stability.”  

Experian says its Social Media Insight Program (which evaluates customer reviews and other data) can help lenders to predict risk 12% more effectively overall. When evaluating credit applications for businesses with little credit history, an Experian credit score enhanced with Social Media Insight can be 91% more effective.

The good news is that you probably don’t need to worry about a few random negative reviews hurting your company’s credit scores. Rather, it’s generally your business’ overall number of reviews (and the total number of positive vs negative reviews) which matter most.

One word of caution – if you’re thinking about trying to game the system with phony positive reviews, don’t. While it’s fine to encourage reviews from real customers, scoring models which consider customer reviews are often designed to sniff out artificial review boosts and other attempted manipulations of the system.

And your business can get in trouble with regulatory agencies like the Federal Trade Commission (FTC) for fake reviews, or failure to disclose relevant information like payments or free products. 

How Much Do Online Reviews Impact Your Business Credit Score?

In the end, whether or not online customer reviews will impact your business credit score (and by how much) comes down to one important factor – which credit scoring model is being used to evaluate your business. If a lender uses a scoring model that doesn’t consider customer reviews, those reviews won’t have any impact on your business credit score.

Even if a lender uses a scoring model that considers reviews, it’s important to keep things in perspective. Customer reviews can give lenders an added window of insight into your business when you apply for financing. Yet your company’s reviews – good or bad – aren’t going to replace the other important information scoring models and lenders consider when evaluating your business credit rating.

A series of great reviews, for example, won’t offset the fact that your business has been paying its financial obligations late. In this situation, your business would still likely have poor credit scores. By contrast, a few negative reviews probably won’t tank your business credit scores if you have years’ worth of established credit and on-time payment history.  

It’s wise to focus on collecting positive reviews from customers, both for the financial success of your company and the health of your business credit. However, while positive online reviews could potentially enhance your business credit scores, they’re not a substitute for the traditional business credit building habits you need to create.

How To Encourage Good Reviews

“Reviews are hard to get, so you must have a process for asking for them,” recommends Henry Lopez, a serial entrepreneur, small business coach and consultant, and host of The How of Business podcast show. He suggests focusing on Google Reviews and encourages small business owners to ask for reviews early on, in what he says is the “honeymoon phase” of the business relationship. 

He also recommends responding to all reviews and including target keywords in your reply. (Keywords are words or terms customers use when searching for products or businesses like yours.) 

Jeremy Diamond, attorney and senior partner with Canada’s largest personal injury law firm Diamond and Diamond, says his firm sends a link requesting a review after completing engagement with a client. And while it may be acceptable to “offer small incentives (within guidelines) for leaving a review, avoid purchasing reviews,” he advises. 

“Simplify the process for consumers as many of us have hectic schedules,” suggests Power. “Secondly, remember that many of your largest supporters want to see you succeed. Elucidate how their review can help grow your business and in turn offer future benefits for them.”

How To Respond To Negative Reviews

If your business has an online presence, you’re likely to get negative reviews at some point. 

“No business is perfect,” Power says. “Customers understand that individuals may have negative experiences with any business. At the end of the day, a business should remain solution-oriented. Validate the individual’s feelings while addressing any further clarity and context. Finally, show a level of contrition.”

Lopez agrees. “Try not to take it too personally when you get a negative review,” he says. “For better or worse, everyone has been empowered to be a critic.”

He recommends responding to negative reviews by encouraging them to contact the company directly. “Don’t engage in a back and forth on the review site if at all possible,” he says. 

Diamond offers these suggestions for responding to negative reviews: 

• Acknowledge the customer’s issue to show understanding and empathy.
• Offer a sincere apology if the complaint is valid.
• Suggest solutions or describe actions taken to rectify the issue.
• Always respond courteously, even to unfair or harsh reviews.
• Encourage further discussion offline to resolve the matter privately.

Online Review Resources for Small Business Owners

These experts recommend several resources for online reviews.

Diamond recommends: 

• Birdeye.com and similar sites offer tools for managing online reviews.
• Platforms like Trustpilot, Yelp, and Google My Business are key for gathering reviews.
• ReviewTrackers and Podium

He’s also published an article that addresses whether online reviews can get you into legal trouble for businesses based in Canada. 

Power says that “Simply Review is a fantastic platform to manage reviews across multiple platforms as it offers location-based management and great data.” 

SCORE.org, which matches small business owners to free business mentors, offers tips on acquiring customer reviews. You can also get matched to a business mentor who can help you review your marketing strategy, including how to solicit and respond to reviews. 

What To Do if My Online Reputation Is Damaged

Power says not to obsess too much over the occasional negative review. “Positive reviews of a business can also counter excessive negative feedback. For every person that dislikes your business, you will likely have two or more that would gladly vouch for you,” he says. 

Diamond recommends a number of steps small business owners can take if their business has been damaged by negative reviews. 

One of the most important he suggests: “Take action to repair your online reputation through public relations by developing a positive narrative that highlights your companies’ strengths, achievements and positive aspects. Leverage media relations with journalists, bloggers, and influencers in your industry to publish positive stories and mentions in reputable publications can significantly improve your public perception.”

In the end, “repairing an online reputation takes time and consistent effort.” Diamond warns. “The goal is to rebuild trust, improve public perception and create a positive association with your brand or personal identity through PR, social media and SEO.”

How To Remove Bad Reviews From My Profile

Diamond emphasizes that your main focus should be to solicit positive reviews and respond appropriately to the reviews you get. “It’s important not to focus on removing the negative reviews but how to boost positive engagement by encouraging satisfied customers to share their experiences,” he advises. 

However, Power advises there are times you may need to go further. “If a platform has been ‘review bombed’ by a disgruntled employee or competitor, it’s important to look into the various legal remedies that are available.” 

Bottom Line: Online Reviews and Your Business Reputation

Your business reputation is important. Lenders often look at how your business handles its finances when evaluating whether to extend new credit to your business. 

Online reviews can also have a direct impact on your business finances. They can influence sales and customer retention. They can make or break new business partnerships.

Just as bad credit can make it more difficult to grow your business, negative reviews can have serious consequences.

Just as it’s important to monitor your credit, you want to monitor your online reputation. (Here are 138+ places to get free credit scores.) 

“Regularly monitor your online presence for reviews and social media mentions,” says Diamond. “Maintain active and positive engagement with your audience on social media and other platforms. This can help build a loyal community that supports and advocates for your brand.”