What Is A Business Credit Score?

When you think of credit scores, you probably think of personal credit first. And for many small business loans and credit cards, your personal credit score still matters.

But your business can have its own credit scores, too — and they work differently from personal credit scores. They’re calculated by different bureaus, use different scoring models, and may be easier for others to access. Here’s what business credit scores are, how they work, and why they can matter as your business grows.

What Is A Business Credit Score?

A business credit score helps lenders, vendors, suppliers, and other companies judge how risky it may be to extend credit to your business.

Unlike personal credit scores, business credit scores don’t all use the same range. Some common business scores use a 1-100 scale, while others use different scoring ranges. In general, a higher score makes your business look less risky.

Business Credit VS Personal Credit

Business credit and personal credit both measure creditworthiness, but they look at different information.

Your personal credit score is tied to you as an individual. It’s based on your personal credit cards, loans, payment history, credit utilization, and other personal credit activity.

Your business credit score is tied to your business. It may be based on business loans, business credit cards, vendor accounts, trade lines, public records, company size, industry risk, and time in business.

Business credit reports are also generally easier for others to access. Unlike personal credit reports, which usually require your permission to pull, business credit reports may be purchased or reviewed by lenders, vendors, suppliers, insurers, or other companies.

For small business owners, both types of credit can matter. A lender or card issuer may look at your business credit, personal credit, revenue, cash flow, time in business, or other risk factors before approving you.

Why Business Credit Scores Matter

A strong business credit score can make it easier to qualify for certain loans, corporate cards, vendor accounts, and trade credit. It may also help you qualify for better terms, such as higher credit limits, lower rates, or longer repayment windows.

Business credit can matter when you’re:

• Applying for business financing
• Opening vendor or supplier accounts
• Applying for a corporate card or business charge card
• Negotiating payment terms with vendors
• Trying to separate business and personal credit activity
• Building credibility with lenders, suppliers, or partners

That said, your business credit score usually isn’t the only thing lenders or vendors consider. They may also look at your personal credit, revenue, cash flow, time in business, industry, debt, and overall financial health.

Main Business Credit Bureaus & Scores

Business credit scores can come from several different bureaus and scoring models. The three main business credit bureaus are Dun & Bradstreet, Experian, and Equifax. FICO also has a small business scoring model called the FICO SBSS score.

Here’s a quick look at the main scores you may run into:

Your score can look different depending on which bureau or scoring model a lender, vendor, or supplier uses.

What Is Considered A Good Business Credit Score?

A good business credit score depends on the scoring model being used. There isn’t one universal “good” score across every business credit bureau.

For example, a Dun & Bradstreet PAYDEX score of 80 or higher generally shows that your business pays bills on time or early. Experian’s business credit score also uses a 1-100 scale, with higher scores showing lower risk. FICO SBSS uses a 0-300 scale, so its score ranges are different.

Instead of focusing on one universal number, focus on the habits that help across most scoring models: paying bills on time, keeping debt manageable, avoiding serious negative marks, and keeping your business credit information accurate.

How To Check Your Business Credit Scores

Checking your business credit score usually isn’t as simple as checking your personal credit score for free. Business credit bureaus are not required to give you free access to your business credit report, so you may need to pay for a report or sign up for a monitoring service.

You can check your business credit through the major business credit bureaus, including Dun & Bradstreet, Experian, and Equifax. Some third-party services may also offer business credit monitoring or limited business credit information.

Before checking your score, make sure your business information is consistent and up to date. This may include your legal business name, business address, EIN, business structure, and D-U-N-S Number if you have one.

If you don’t have a business credit profile yet, you may need to start by opening business accounts that report to the credit bureaus, such as vendor accounts, trade lines, business credit cards, or other business financing products.

How To Improve Your Business Credit Score

Improving your business credit score starts with building a clear credit history for your business and making payments on time.

Here are a few ways to help improve your business credit:

• Apply for an EIN if you don’t already have one
• Get a D-U-N-S Number from Dun & Bradstreet
• Open vendor accounts or trade lines that report to business credit bureaus
• Use a business credit card or business financing product responsibly
• Pay bills on time or early
• Keep business debt manageable
• Monitor your business credit reports for errors
• Keep your business information consistent across accounts and applications

The most important step is paying on time. Business credit scores are heavily influenced by payment history, especially whether your business pays vendors, suppliers, lenders, and card issuers as agreed.

Also, keep in mind that business credit is only one part of your overall financial profile. Lenders may still look at your personal credit, revenue, cash flow, time in business, debt, and industry before approving you for financing.

The Bottom Line On Business Credit Scores

Business credit scores can help lenders, vendors, suppliers, and other companies understand how risky it may be to work with your business. They aren’t the only thing that matters, but they can affect your ability to qualify for loans, trade credit, corporate cards, and better payment terms.

The best way to build a strong business credit profile is to keep your business information consistent, open accounts that report to the business credit bureaus, and pay bills on time or early.