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What is a Business Credit Score?

Personal credit scores rank creditworthiness of individuals, business credit scores do the same for businesses. Personal credit scores range from 300 to 850. Business credit scores range from 0 to 100. Major business credit reporting agencies Dun & Bradstreet, Experian , and Equifax produce business credit scores and reports. FICO scores for small businesses are known as “FICO SBSS.”

If you try to compare business credit to personal credit, you’re likely to get frustrated. That’s because business credit scores differ from consumer credit scores in some key ways:

Credit Score Ranges: Personal FICO scores range between 300 to 850; business credit scores typically range between zero to 100. Paying on time to lenders and/or creditors is the best thing you can do to establish a good business credit score.

Free scores: There are over 150 places where consumers can check and monitor their consumer credit scores for free . But free business credit scores are available from a very limited number of sources, such as Nav.

Access: Anyone can check a businesses’ credit scores, unlike consumer scores which are restricted to anyone with a “permissible purpose” under federal law.

Accuracy: A study published in the Wall Street Journal found as many as 25% of business credit reports may contain errors or are missing key information. If the credit report contains mistakes, the scores produced may not accurately reflect the risk of the business.

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The following factors may be used to calculate business credit scores. Each scoring model is different, though, so some of these factors may not carry much weight, or may not be used at all.

• Payment history
• Age of credit history
• Debt and debt usage
• Industry risk
• Company size

By far, the most important factor when it comes to business credit scores is payment history: does your business pay its bills on time? Some credit scores are almost exclusively calculated based on payment history.

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Intelliscore Plus℠ from Experian

With the Experian Intelliscore Plus℠ scores range from 1 to 100. A Higher scores indicate lower risk, so as a business owner, you want to aim for a higher score.

There are over 800 variables that can go into these scores, including tradeline and collection information, public filings, new account activity, key financial ratios and other performance indicators. But the bottom line is paying on time and managing debt well will help build a strong score.

Note: Experian offers a version of Intelliscore Plus that can evaluate data from the owner’s personal credit report as well as business credit.

Learn more about Experian Business Credit Reports here .

FICO® LiquidCredit® Small Business Scoring Service℠

FICO’s Small Business Scoring Service (SBSS) rank-orders applicants by their likelihood of making payments on time. The score ranges from 0 to 300. The higher the score, the better. The scoring can use both personal and business credit data and other financial information. A strong history of business credit with timely payments to vendors and suppliers may help boost your SBSS score. The FICO SBSS score will be used for term loans, lines of credit, and commercial loans up to $350,000 from the Small Business Administration (SBA). The minimum score to pass the SBA’s pre-screen process is currently 140 .

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Lenders and other creditors need a means of determining how well your business repays debts before they will approve you for financing. This is where business credit scores can come in. Higher scores indicate to creditors that your business is more likely to pay bills on time, thereby improving the odds that you can obtain financing. Lenders can check your company’s business credit reports to get more detailed information about your business’s financial history, and business credit scores serve as shorthand evaluations. Here are three other ways your business credit scores may be used:

4 Reasons to Check Your Business Credit Scores

Research by Manta and Nav found that 72% of business owners don’t know their business credit scores. If you’re one of those who don’t know their scores, here are four great reasons to check your business credit on a regular basis:

1. Mistakes happen. Your business credit may get mixed up with that of another business, or one of your vendors or lenders may report incorrect information. If you don’t check, you won’t know.
2. Credit scores change. Every time new information is reported by your lenders and vendors, your credit reports— and scores— may change.
3. Fraud can occur. Business credit fraud or identity theft is a growing problem and may result in negative information on your reports. Monitoring your credit can alert you to suspicious activity.
4. Get better financing. The Nav American Dream Gap report found that business owners who understood their business credit were 41% more likely to be approved for financing.

Your lenders, vendors and even your competitors may check your business credit without your knowledge. Others may be checking your credit— shouldn’t you?

How Can I Get Free Business Credit Scores?

As a consumer, you probably have a few different sources for your free credit reports and scores (we found 150+ places you can get your scores for free ). But free business credit reports are another story. Many business credit reporting agencies require you to pay to review the information they have on your business.

Business owners can, however, access information about their Experian and Equifax business credit reports with a Nav account . Nav provides business credit grades for each score as well as summary reports, your personal credit score from Experian, and free tools that may help you build business credit. (No credit card required.)

Get your free scores

Business Credit Reports

Just as you’d view your personal credit report to check your financial history, the same information can be reviewed for your business. That’s because the minute you start a business, credit bureaus begin to develop a business credit report on your company. They do this by scouring public records and other financial data.

Then, when you receive small business loans or a line of credit — sometimes called trade credit — information about your payment history is compiled by one or more business credit reporting agencies, including Experian, Equifax and FICO and turned into a business credit score.

The Basics of Business Credit Reports

Your business credit report only includes debts that are under your company’s federal tax identification number — also known as an employer identification number. Any personal lines of credit that you have are not listed on the report. This is true even for business credit cards that are still listed in your name.

Information that is present on your trade credit report is voluntarily sent to the reporting bureaus from the businesses that own the debt. This means some lines of credit may not be listed on the report.

How Business Credit Is Used

When you apply for future business credit, potential creditors and lenders will view the report to determine your company’s creditworthiness. They will use the information to evaluate how well your business repays its debts, and negative marks can cause you not to get approved, or lower the amount of credit they will extend, or limit the terms under which that credit will be given.

Besides lenders and creditors, several other parties may be interested in reviewing a business credit report. Business insurance companies, for example, assess a business’s report as part of the underwriting process. Customers and other businesses that are being considered for a joint venture or partnership may also review your company’s credit history before working with your business.

Why Separating Personal and Business Credit Matters

Trade credit reporting is beneficial for helping you separate your business and personal finances, which is particularly advantageous in regard to credit. A business credit report offers a clear view into the financial standing of your business, providing you with a clean report of the company’s credit inquiries, lines of credit and delinquencies. This streamlined information makes it easier for fraud monitoring and for lenders to accurately assess creditworthiness (see the importance of business credit monitoring ).

Furthermore, separately listing business credit information protects your personal credit standing. Your company will typically have more annual inquiries and for larger lines of credit. With combined information, these inquiries could hurt your credit score, but a trade credit report gives your business its own history to list your business’ credit activity.

Top FAQs on Business Credit Scores

• What is an acceptable business credit score?

  A good business credit score is considered anything equal to or higher than 76 for Equifax or Experian or 80 and above for Dun & Bradstreet. Determining whether a credit score is acceptable or not depends on who’s looking at the credit score and for what purpose. While a lender, vendor, or other business entity may do business with your company even if you have a fair or poor business credit, you’re likely to get better terms with a higher credit score.

• How does a small business get a credit score?

  In order to get a credit score for your business, you have to establish business credit. The simplest way to get a credit score is to do business with companies that report payment history to the credit bureaus. Your business will build a credit history from there. If you pay on time and keep your debt at a manageable level (based on your annual revenue and other factors), you’ll build a good credit score.
  
  There are seven steps to establishing a business credit score:
  1. Build a solid foundation by establishing your business as a legitimate company.
  2. Register your business with your state and local government and the IRS.
  3. Get a D-U-N-S number (Data Universal Numbering System) from Dun & Bradstreet.
  4. Set up accounts that report to business credit bureaus.
  5. Open a business credit card.
  6. Pay everything on time.
  7. Monitor your credit through a service like Nav .
  
  For more details, check out our article on how to establish business credit .

• What is a good Dun & Bradstreet score?

  The Dun & Bradstreet PAYDEX score ranges from one to 100 and is generated based on your business’s financial information, especially payment history. A good score is considered anything at 80 or above and indicates that you’re likely to make payments on time.

• What is a PAYDEX score?

  A PAYDEX score is the business credit risk score that Dun & Bradstreet generates for businesses. It ranges from one to 100 and is based on your business’s payment history. If you pay invoices or other debt on time, your PAYDEX score will be higher. A higher score indicates you’re a less risky company for another business to work with, and can help you get access to small business loans, business credit cards, or other financing — generally with better terms and interest rates.
  

• How can you check your business score for free?

  You can check your business credit score at the websites for Dun & Bradstreet, Equifax, and Experian, although they may charge a fee to see your scores. There are websites that will gather the information and report it for you all in one place, including Nav. Nav also offers other exclusive financial health resources for your business based on your company’s real data, like a Cash Flow Tool that provides actionable insights, and a curated list of loans, credit cards, and other financing that your business is most likely to qualify for. Sign up for Nav today to start tracking your business credit and seeing what other options are available to you.