The internet is a treasure trove of information for any credit professional. You can find contact information, competitors, and can even judge the health of a business based on their online presence. One of the most popular things people do online is leave reviews on businesses. There are countless platforms to do this on but some of the most popular are Facebook, Google, and the Better Business Bureau. The question then becomes how, if at all, should these factor into your credit decision.
All Online Reviews Are Not Equal
All business review sites are equal. Typically you should trust places like the Better Business Bureau more than you should trust a Facebook post. Websites like Angie’s list, the Better Business Bureau, and Yelp are set up solely to provide a platform where customers can review businesses. This means that it is in their best interest to protect the integrity of their reviews and make sure that they are legitimate and validated. Each of these sites as a combination of algorithms and human monitors that seek to limit the amount of spam or fake reviews. This is not to say that there are no flaws in these sites as well, but a Better Business Bureau grade should mean more than a high star rating on Google.
How These Reviews Should Fit into the Credit Process
Whether someone is going to honor their debts and run a business correctly comes down to their character in many cases. Clearly, there can be extenuating circumstances, but on par, if you can judge someone’s character correctly you will have a better idea of whether they will pay or not. This is where online reviews can be helpful. If someone is running a business well and has a large number of positive reviews, they are more likely to be someone who will also honor their debts. Not to mention, it also means their business is more successful and this can afford to honor their debts. Bad reviews about a business, especially ones focused on management, show the opposite. While we do not mean that you should stop doing business with all companies with bad online reviews, we do think it should be something you consider during the credit process. At the end of the day, a company’s fundamentals, specifically their payment history, and financial health are far more important and should take precedence over some negative reviews online. Online reviews though can play a factor when the fundamentals could go either way.
Making the right credit decision is tough. There is no getting around this fact, but using everything, including online reviews, that you have at your disposal can hopefully make the process a little easier.