While most Americans know the basics regarding personal credit scores, business credit scores are a bit more obscure. However, this score is important for any small business owner to know.
A business credit score, sometimes known as a commercial credit score, is a measurement used by lenders to determine your company’s creditworthiness. The number is based on your business’s credit spending and repayment history. Several credit bureaus create different business credit scores for your company. If your business is extremely new, you may not even have a score yet.
Your personal credit is developed over time and based on your spending habits alongside your repayment history. A business credit score is based on similar metrics but applies to your business instead of your personal creditworthiness.
Notably, a business credit score is public information, unlike your personal credit score. This is a huge impetus to keep your score high because anyone, including lenders, customers, and vendors, can access it.
While different credit bureaus have different systems, business credit scores commonly range from 0 to 100. A score above 75 is an excellent rating. Lenders will likely take issue with a score under 50.
This spread is different from personal credit scores, which range from 300 to 850.
Experian, Equifax, and Dun & Bradstreet are the 3 bureaus in the United States responsible for calculating business credit scores. Each bureau has different algorithms, but they follow similar conventions.
The score is determined by how long your business has existed, how many credit line applications your business submitted over the past 9 months, how many credit lines your business opened over the past 6 months, your company’s credit repayment history over the past 12 months, and the number of late payments on your business’s record.
Maintaining a good business credit score is one of the best ways you can position your company to qualify for financing in the future. Not only does a good score help secure funding, but lenders will also be more willing to set better terms.
Although you can check your personal credit score for free, getting your business credit report is more involved.
Once you have a business credit report in your hands, you can see where you can improve and check for errors. Keep abreast of your report with all 3 of the major credit bureaus.
– Dun & Bradstreet: Order your business credit report online or call them at (844) 238-4821
– Equifax: Order your business credit report online or call (866) 519-4800
– Experian: Order your business credit report online
Receiving a copy of your business credit report will cost money, and the cost depends on how detailed of a report you want.
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