Business Credit Scores: Everything You Need to Know

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• Like individuals, businesses receive credit scores that influence loan approval and interest rates.
• Business credit scores range from zero to 100, with 100 being the best possible score. 
• Several agencies track business credit. Dun & Bradstreet and Experian are two of the biggest.

What is a business credit score?

Most adults are familiar with the idea of personal credit scores. The industry-leading FICO score and the increasingly important VantageScore (the two main personal credit score models) give lenders and other finance companies a snapshot of how well you manage your debt and if you're likely to make on-time payments in the future.

Businesses have credit scores too, and they work similarly to personal credit scores in many ways, though the scoring scale is different. If you own a small business and want to better understand how your business credit works, keep reading.

A business credit score is a financial measure of a company's history of borrowing and managing credit. Past performance is a strong indicator of future performance when it comes to borrowing habits, so many banks and other lenders look at business credit scores as a predictor of a company's likelihood of repaying its debts as agreed.

How business credit scores differ from personal credit scores

While business and personal credit scores share some similarities, such as their impact on your borrowing power, they don't perfectly align. Personal and business credit is tracked by different agencies. Business credit bureaus also use a different scale, typically ranging from zero to 100, as opposed to the 300 to 850 range used by personal credit bureaus.

A company's credit score is also based on different factors, including the size of the business, how quickly its bills are paid, and even its industry.

Finally, your business credit score is more publicly accessible than your personal score.

How is your business credit score calculated?

Business credit scores are based on underlying business credit reports that track loans, credit lines, business credit cards, and other business borrowing activity to help lenders and business partners understand how risky the underlying business is when it comes to credit. Your payment history is the most important factor in determining your business credit score.

The most popular business credit score systems use a score of zero to 100, with 100 being the best. However, there are multiple credit-scoring models used. Some companies even offer more than one business credit score from the same source.

A higher business credit score can help your business in several ways. Like personal credit, it can help you qualify for financing with potentially larger credit limits and lower interest rates. It may also help you qualify for lower business insurance rates.

What types of business credit scores are there?

Just like there are three credit bureaus that track consumer credit scores, there are multiple companies that track business credit scores. Here are some of the major business credit score models you may come across:

• Dun & Bradstreet PAYDEX: The PAYDEX score from Dun & Bradstreet is one of the best-known business credit scores. This business credit score ranges from zero to 100 with scores over 75 considered excellent. A score of 80 or higher indicates that you typically pay on time or early.
• Experian Intelliscore Plus: Intelliscore Plus from Experian is another zero to 100 scoring model. Businesses that score at least 50 or above are considered low risk businesses under this model.
• FICO LiquidCredit: FICO runs the Small Business Scoring Service (SBSS) which uses a 0 to 300 scale. The SBSS score is used by the Small Business Administration (SBA) when approving its popular SBA program loans. The SBA requires a score of 140 or above to pass its lending threshold.
• Equifax Payment Index: Equifax offers multiple business credit scores behind the scenes to calculate a zero to 100 risk score. This is based on multiple credit scoring inputs. A score of 90 or above indicates that the business typically pays its bills on time.

How to find your business credit score

Business owners can tap into both free and paid services to get access to business credit information. You can generally get detailed business credit reports and scores for a fee from the major reporting agencies. Free business credit scores may offer more limited information.

Free business credit scores

• Nav: Nav offers free business credit scores and business credit reports with a paid subscription available that includes additional reports. Nav members can get access to scores from Dun & Bradstreet, Experian, Equifax, and FICO.
• Dun & Bradstreet: One of the best-known names in business credit, Dun & Bradstreet gives you free access to general scores and business credit ratings including a range for your PAYDEX, Delinquency Predictor, and Financial Stress scores. To get your score details, though, you'll have to pay.

How to improve your business credit score

While almost everything related to your personal credit is handled automatically, it may take a little more effort to track and improve your business credit. Here are some important tips in building and maintaining a strong business credit score:

• Register your business: Sign up for a DUNS number with Dun & Bradstreet and create profiles with other credit agencies as well if you have a concern about building business credit. Registering an account with the credit bureaus ensures these companies know your business exists.
• Make sure your credit lines are reported: Whether it's a business credit card or a small business loan, it's important that your borrowing and payment activity is reported to the credit bureaus. If your borrowing is not already reported, services like the premium one from Nav can help ensure your business credit is accurate and includes all activity.
• Pay bills on time or early: With a personal credit score, all you have to do is pay by the due date to have perfect credit. For some business credit scores, you have to pay before the due date to get a top-level business credit rating.
• Keep revolving balances low: Another similarity to personal credit scores is the importance of your credit utilization ratio. Keeping business credit card and line of credit balances low is good for your business credit.
• Avoid tinkering with credit: Old accounts with a positive payment history are great for business credit. Opening or closing many accounts quickly will lower your average credit age and show more risk than a business with only older accounts.

Business credit can help you get loans to fund expansion, inventory, seasonal expenses, or just act as a backup plan for times when business isn't going as well as usual. You don't have to sit back and wait for your business credit to simply happen. Take an active role and start working toward an excellent business credit score now.

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Business credit score FAQs

Experian business credit scores range from 1 to 100. A score of 76 or higher is considered good, while scores between 50 and 75 are considered fair. These scores are calculated using the FICO Small Business Scoring Service.

Several platforms and well-known credit reporting agencies such as Dun & Bradstreet, Equifax, and Experian allow you to check your business credit score. These agencies specialize in assessing and reporting on the creditworthiness of businesses. Accessing your business credit score through these platforms is simple, and there are typically free and paid options available.

An LLC (Limited Liability Company) can have a credit score, and these scores are typically managed and maintained by business credit bureaus separate from consumer credit scores. An LLC's credit score reflects its financial reputation and creditworthiness in the business world. It encompasses how an LLC manages financial obligations and debts. This includes business credit score factors such as the ratio of debt to available credit, the types of credit accounts held, and any outstanding balances.

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