What Credit Score Does Your Lender Use?

What Credit Score Does Your Lender Use?

What Credit Score Does Your Lender Use?

Did you know: As a small business owner, you can be judged by more than 7 different credit scores!

So when applying for business credit or a loan, you probably won’t know what score—or combination of scores—your lender uses.

And ignoring any one of them could ruin your chances of getting approved.

Credit errors can kill your app

A few years ago, Nav’s founder and CEO, Levi King, experienced this problem first hand.

“In 2005 I got mailed a generic form letter that said my application for business financing was rejected due to information found on my Equifax credit report,” said King. “It didn’t make any sense. I knew my personal credit was spotless.”

It wasn’t until he dug a little deeper that King uncovered the issue.

“After several phone calls, an underwriter clarified that it was my business credit report with Equifax that was a problem, not my consumer credit report (the form letter I received didn’t specify).”

Once he got the report in his hands, King noticed a couple glaring errors. It took him awhile to get it sorted out with Equifax, but he finally got approved for his loan.

Get to know all of your scores

For most small business owners, you can expect lenders to look at both your personal and business credit, especially if you haven’t been in business very long.

To make things even more confusing—because of differences in the law—your business isn’t protected by the FCRA. That means lenders aren’t required to notify you if they denied your application because of issues on your business credit report.

It could be used against you and you may never know! That’s another reason why it’s critical to monitor your business credit.

To help you figure out which scores you should be looking at, here’s a list of the most prominent reporting bureaus and providers:

Personal scores: Experian, Transunion and Equifax.

Business scores: Dun & Bradstreet, Experian, Equifax and FICO SBSS.

Which scores do small business lenders use?

It’s almost impossible to find out exactly how your lender evaluates your financing application. They can use any combination of scores.

In fact, many lenders will draw information from various sources and create their own risk models.

What we do know is that the SBA uses the FICO SBSS score to pre-screen all 7(a) small business loans up to $350,000. And if the SBA is requiring it, you can be sure more banks will follow suit—hundreds already use SBSS.

Why do my credit scores vary?

Each bureau can have different information on file for the same person or business, and wind up producing a different score. That’s why you’ve probably noticed your score vary from bureau to bureau.

Even random things like your industry code can have a major impact on how your business is judged.

To give yourself the best chance to secure funding, you should make sure every detail on all your credit reports is correct before you apply.

Be careful: Some credit monitoring sites allow you to monitor your personal scores for free, but don’t include all three bureaus. Plus, many of these “free” sites wind up selling your personal information to other companies. (It’s how they make money.)

Instead of tracking all seven scores separately, there’s an easier solution.

How to easily monitor all your scores

Nav’s platform gives you access to both your business and personal credit reports from four of the leading bureaus—all in one spot.

That means you can get a comprehensive view of your credit life without having to go from site to site, saving you time and money.

Have you found errors on your reports? What was your experience?

Email us at support@nav.com or let us know in the comments below, and we may be able to help.


This article was originally written on March 27, 2014 and updated on February 2, 2021.

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