As the final quarter of the year approaches, business owners spend significant amounts of time examining their financial records. This way, they have a coherent view of how they performed this year and what to expect in planning for the new year.
As business owners examine these records, they also check their business credit reports. In doing so, they can review where their business credit score is and what debts they owe.
If you’re a business owner, you may notice that your credit report has UCC filings on it. If so, you may wonder, “What does UCC filing mean?”
We understand how complex this can be. So, we’ll walk you through all the essential information about UCC filings in the guide below!
UCC Filing Meaning
First, we’ll answer the question, “What is a UCC filing?” A UCC filing is a legal notice that lenders file with the secretary of state. This notice demonstrates that the lender has a security interest against one of your assets.
This interest, or lien, affects the asset you use to secure your financing. These filings stem from the Uniform Commercial Code, or UCC.
The UCC was developed to standardize business transactional processing in multiple states. In doing so, it created more uniformity across the nation. The code has eleven articles, but we’ll focus on article one for the remainder of this guide.
The UCC-1 protects a lender’s interests in case a borrower defaults or files for bankruptcy. In this case, the lender can either foreclose on the asset, seize it, or sell it off. A UCC-1 can last for five years.
Your business credit report will show if one of your lenders put a UCC lien filing on your asset. It will also show if the filing remains active.
How UCC Filings Affect Your Business
If you don’t manage the UCC-1 well, this lien could negatively impact your ability to obtain higher quality business financing. Other lenders may interpret your UCC-1 as a sign that your business isn’t financially secure or stable.
To make matters worse, UCC-1 liens can remain on your credit statements even after you’ve paid your debt in full. If you have more than one UCC filing against you, that worsens things even more.
A UCC filing on your business credit report can negatively affect your credit score across all three business credit bureaus. If you’re unsure about your UCC status, perform a UCC filing lookup.
Removing a UCC-1 Filing
So, the question is, can you remove a UCC-1 filing from your credit report? The answer is yes, but it has to come from the lender. You cannot remove the statement, even by paying the debt in full.
Removing these liens is a subject unto itself. If you want to learn about UCC1 removal, spend some time investigating online.
What Can You Do?
If you have UCC filings on your business assets, the best thing to do is work out a way to pay your debts. Contact your lender and see what sort of arrangement you can come to today!
We hope you enjoyed this article! If so, check out some of our other financial content today.