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If you’re a business owner interested in applying for credit or loans, you should know what a business credit score is. Banks, lenders and financial institutions may consider a company’s business credit score when making loan approvals or determining loan interest rates and borrowing terms. A high business credit score indicates to lenders that a company will likely pay back its debts on time and in full.
Having a business credit score and report can make it easier for your company to borrow money with better terms. You’ll also often find that when you can show lenders a strong personal and business credit score, you can be approved for larger loans. Lastly, a business credit score can allow you to borrow under the company’s name, which can help keep your business and personal finances separated.
Personal and business credit scores are similar in purpose but different in execution.
Your business credit score takes into account many of the same factors as your personal credit score, such as payment history, credit utilization and public records like bankruptcies. Each of the four leading credit scoring firms that provide business credit scores (Equifax®, Dun & Bradstreet, Experian® and FICO) has its own specific set of factors.
Equifax offers comprehensive business credit reports for small businesses up to large international companies. The following is some information found in these reports:
Find out more here.
Dun & Bradstreet’s business credit score is called the PAYDEX® score, which is meant to show the overall financial health of a company. When pulling a business credit report and an associated PAYDEX score from Dun & Bradstreet, you may receive the following information:
Find out more here.
Experian offers business credit scores under the name Experian Intelliscore Plus® (with a V2 and V3 option available). An Intelliscore Plus score may use a combination of the owner’s personal credit and the business’s credit to evaluate the overall risk for the company. The score will be based on the owner’s personal credit information if the business is relatively new and has minimal credit available. The Intelliscore Plus score looks at factors such as payment history, credit utilization and public records.
The information that appears on an Experian business credit report includes the following:
Find out more here.
FICO Small Business Scoring Service® (SBSS) specializes in business credit scores for small businesses. Unlike other business credit scores, the FICO SBSS range goes from 0 to 300. It takes into account the owner’s personal credit score and the company’s details when creating a business credit score.
Additionally, the FICO SBSS evaluates business details such as years in business, total number of employees, value of business assets and more. The combination of personal and business data allows FICO to create a business credit score that represents the company’s credit risk.
Find out more here.
You can check your business credit score by reaching out to any of the main business credit reporting agencies we’ve just covered. For a comprehensive overview of your business credit standing, it’s best to order a report from each of these companies.
Business credit reports aren’t usually free, so you should expect to pay a fee. If you’d like credit report monitoring or frequent access to your business credit score, this will often cost extra.
Some easy steps you can take to build your business credit are:
Taking care of your business credit is similar to taking care of your personal credit. You need to keep a close eye on your credit standing to ensure you can be approved for loans in the future when your company needs them. A strong credit score will give your organization access to more lending options at better rates and terms, saving your business thousands.
Start by reviewing your personal and business credit reports to ensure they’re accurate. The consultants at Lexington Law Firm may be able to help by reviewing your personal credit reports and helping you file disputes if needed. (Note: Lexington Law Firm does not review business credit reports.) Reach out to our team today for more information.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
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