Business Credit Scores & Reports
By Gerri Detweiler
March 15, 2019
Strong business credit scores are the key to getting your company approved for trade credit and financing. Your business credit reports tell lenders, vendors, suppliers, and business partners how likely you are to repay them on time.
What is a Business Credit Score?
Personal credit scores rank the creditworthiness for individuals, and business credit scores rank the same for businesses. Credit agencies Dun & Bradstreet, Experian, and Equifax produce business credit scores and reports. The FICO SBSS business credit model also creates a score that lenders use to make faster, more accurate lending decisions.
Two commonly used scores range from 0 to 100. Scores of 80 or more are considered good. These scores are key to getting approved for financing and trade credit, as well as qualifying for lower rates on things like business insurance and certain loan options. Anyone can check your business credit rating, so it’s in your best interest to know what’s contained in your business credit report.
Free Personal And Business Credit Scores
See how lenders view your business data & apply for financing you’re likely to qualify for.
Business credit scores
|Business credit score||Score range||Score overview||Typically used by|
|Dun & Bradstreet PAYDEX||0 – 100||Signifies how promptly you’ve paid bills in the past||Vendors and suppliers to evaluate what trade terms to extend to your business.|
|Intelliscore PlusSM from Experian||0 – 100||Predicts the likelihood of serious delinquency in the next 12 months.||Lenders to evaluate your business for loans and lines of credit.|
|FICO® LiquidCredit® Small Business Scoring Service℠||0 – 300||Rank-orders small business by their likelihood of making payments on time. Personal and business credit factors may both be used.||Banks and other lenders to evaluate your business for loans and lines of credit. Required for certain SBA loans.|
|Equifax Business Delinquency Risk Score||224 – 580||Predicts the likelihood of severe delinquency on business accounts.||Lenders, vendors and suppliers can use this score to determine how likely you are to repay a loan or net terms.|
Each business credit reporting agency 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 between reports.
The Dun & Bradstreet PAYDEX
According to D&B, the PAYDEX is a unique, dollar-weighted indicator of a business’s payment performance based on the total number of payment experiences in Dun & Bradstreet’s file. The Dun & Bradstreet PAYDEX ranges from 1 to 100, with higher scores indicating better payment performance. PAYDEX is primarily used by vendors and suppliers to judge your business when determining what terms to extend on trade credit (e.g., net 30, net 60, etc.) Typically, the better the score, the more generous the terms extended. This is important because having more time to pay your bills can help you better manage cash flow.
Intelliscore Plus℠ from Experian
According to Experian, Intelliscore Plus℠ is a statistically based credit-risk score that can combine business and proprietor credit data to predict the likelihood of serious delinquency in the next 12 months. Scores range from 1 to 100, where lower scores (score range below) indicate higher risk. Risk is very low in the first two risk classes, risk class 3 is average, and classes 4 and 5 present above-average risk levels. The intelliscore PlusSM is regarded in the credit industry as quite predictive and economical. It incorporates statistical modeling using over 800 commercial and owner variables — including tradeline and collection information, recent credit inquiries, public filings, new account activity, key financial ratios and other performance indicators.
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 is based upon personal and business credit history 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.
How business credit scores are used
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 come in. Higher scores indicate to creditors that your business is more trustworthy, 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 serves as shorthand evaluations. Here are three other ways your business credit scores are used:
1. Determine your borrowing power.
Your business credit report and score can determine how much financing you are able to secure.
2. Determine your rates on business insurance.
Some insuranace providers evaluate a business owner’s credit as well as the business’s credit to determine rates on commercial insurance.
3. Determine terms you can secure with vendors and suppliers.
Vendors and suppliers sometimes look at a business’s credit scores to decide how long of a grace period to give the business before demanding payment for goods and services. These terms are express in “net” terms –“Net-30” would mean your business has 30 days to post payment. Securing longer terms on your terms with suppliers is a great way to help even out cash flow.
How can I get a free business credit report and score?
As a consumer, you probably have a few different sources for your free credit report (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 for the information they have on your business.
Business owners can, however, access information about their Experian Intelliscore report and Dun & Bradstreet PAYDEX with free Nav account. A free Nav account provides business credit grades for each score as well as summary reports, your personal credit score from Experian, and free tools to help you build strong business credit. (No credit card required.)
Pay your business bills on time or before they’re due.
Open multiple credit accounts (business credit cards, tradelines, loans).
Keep your credit utilization around 25% (don’t max out your credit lines).
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 a business loan or line of credit — sometimes called trade credit — information about your payment history is compiled by one or more business credit reporting agencies, including Dun & Bradstreet, 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.
Doing the right things to build your business credit profile is one of the most important items you can take as a small business owner. Doing so opens up financing opportunities and business relationships that make it a hell of a lot easier for you to run and grow a business.
Ready to see your credit data and start building better business credit? Check Your Personal and Business Credit For Free (No Credit Card Required).
Have at it! We'd love to hear from you and encourage a lively discussion among our users. Please help us keep our site clean and protect yourself. Refrain from posting overtly promotional content, and avoid disclosing personal information such as bank account or phone numbers.
Reviews Disclosure: The responses below are not provided or commissioned by the credit card, financing and service companies that appear on this site. Responses have not been reviewed, approved or otherwise endorsed by the credit card, financing and service companies and it is not their responsibility to ensure all posts and/or questions are answered.