A business has its own credit report that reflects the risk profile of the company, similar to a personal credit score that is like a snapshot of your personal credit profile.
Your business credit score plays a crucial role when you want to expand your business, get loans, and qualify for competitive rates and terms. Lenders look to business credit scores to decide about loans. Suppliers and other businesses use it to evaluate whether or not they want to work with your business.
Before applying for any type of small business financing, it’s important to learn about your business credit score. Keep reading to learn how to check your business credit score and how to manage it to your best advantage.
Key Points
• Business credit scores are vital for loans and favorable terms, influencing expansion opportunities.
• Scores can be checked via Dun & Bradstreet, Experian, Equifax, and FICO.
• Reports include ownership, financials, risk factors, and account history.
• Improve scores with timely payments, accurate reports, and managing credit utilization.
• Regular monitoring prevents identity theft and ensures report accuracy.
Where to Check Your Business Credit Score
A business credit score turns the information on your report into a number that represents the “health” of your business. The scoring range is much different than what you see with your personal credit score. For example, FICO® scores range from 300 to 850.
There are three main sources for business credit scores: Dun & Bradstreet, Experian®, and Equifax®. FICO also produces a small business scoring system.
Experian
Experian’s business scoring models range from 1 to 100, with a higher score being the goal. Experian uses a variety of factors to determine a business score, such as a company’s outstanding balances, payment history, overall credit utilization, and trends over time.
Dun & Bradstreet
Dun & Bradstreet PAYDEX® uses a scale of 0 to 100, with a higher score being more favorable. On this scale, scores of 80 or above are generally considered to present the lowest risk to a lender.
Equifax
Equifax has a few different scoring models for businesses, including the Business Credit Risk Score™, Business Failure Score, and Payment Index. The Business Credit Risk Score indicates how likely it is that a company may incur a 90-day delinquency or charge off over the next year. This score is on a scale of 101-992, and higher scores are generally preferable to lenders.
The Business Failure Score ranges from 1,000 to 1,880 and is used to predict how likely a business is to file for bankruptcy in a 12-month period. The Payment Index is an indicator of a business’ past and current payment performance. Each report will also provide a suggested interpretation of the value.
FICO
FICO’s Small Business Scoring Service (SBSS) runs on a scale of 0 to 300, with a higher score being more favorable. This evaluates a number of individual factors and allows banks and lenders to pool the profiles of different businesses, business owners, and other relevant information from various financial institutions.
Recommended: Unsecured Business Line of Credit for Startups
Factors That Influence a Business’s Credit Scores
Payment history can have a major influence on your business credit score, since it shows lenders how likely you are to repay future balances. The length of your company’s credit history also plays a role, as does the amount of debt you currently carry. The type of industry you’re in and the size of your company also contribute to your business credit.
When you do a business credit score check, you’ll see quite a bit of information about your company. Items you’ll find include:
• Ownership details
• Company financials
• Risk factors
• Account history
• Any liens, judgments, or bankruptcies
• Uniform Commercial Code (UCC) filings
Businesses typically have a credit report as long as they’re registered properly. LLCs, and even sole proprietors, may be able to apply for small business loans based on their financial history.
Recommended: Guide to Business Loans for Bad Credit
How to Get Your Credit Score
When looking for your personal credit report, you’ll notice that there are three primary credit bureaus that lenders use to evaluate your score. Similarly, there are multiple companies you can use to access your business credit score, as well. Here’s an overview of the main ones.
Experian
The most basic credit score report costs $39.95 and includes a one-time report summary as well as your score. You can obtain either a one-time report and scores, or you can subscribe to ongoing monitoring. For ongoing access to both your reports and scores, it costs $199 a year.
Dun & Bradstreet
Dun & Bradstreet offers a free basic credit score monitoring service allowing you to view your scores, alerts, and inquiries. You can upgrade to paid monthly plans that come with a variety of benefits, such as more scores, detailed legal events, and dark web monitoring.
To get going, you will need a D-U-N-S Number, which is a nine-digit identifying number for your business. D&B may have already created one for your company, but if not, you can obtain one for free in up to 30 business days by going to D&B’s site. You may also pay a fee for an expedited number.
Equifax
You can get a business credit report from Equifax with prices starting at $39.95 for a single report and $199 per year for a basic subscription, and up. Depending on your choice,the information on the report might include such details as a credit summary of your business, public record, and payment trends. You may also see risk scores.
FICO
A business’ FICO® SBSS score indicates the creditworthiness of a business and is a metric often used by the Small Business Administration (SBA) when reviewing loan applications. Since the FICO SBSS score is aggregated from data collected from the other credit bureaus, it can be worth checking in on those credit reports for errors and inaccuracies.
Recommended: Accounts Receivable Financing
Why Your Business Credit Report Is Important
Your business credit report can play a large role in small business loan applications and other types of funding for a small business, which is why it’s important to pay attention and actively manage your score. Prioritizing your business credit score can help give you more options if you ever need to secure financing.
A strong credit score has the potential to help pave the way to more competitive business loan terms. Both credit card interest rates and loan interest rates can jump significantly if your business credit score flags your company as a greater risk. The amount you’re approved to borrow may also vary based on your business’ credit history.
Even if you don’t anticipate needing business financing in the near future, your company’s credit score can affect other areas of business, as well. Because business credit reports are public information, external third parties are allowed to access them without your permission. Vendors may access your credit profile to determine how quickly they should require payment. If they see that you have a strong history of paying loans and invoices on time, you may be granted a longer period of time. On the flip side, a less consistent payment history may cause you to receive a shorter window of time to pay vendor invoices.
A final important use of your business credit report is to ensure your company has not become a victim of a type of fraud. Identity theft issues you may discover on your credit report include new business lines of credit or credit cards that your company didn’t actually open. Keep an eye out for any charges or unknown accounts listed on your business credit report to keep your score accurate.
Recommended: Business Financial Statements
4 Common Strategies for Improving Your Business Credit Score
While bad credit business loans with no collateral and other options are available, they typically come with unfavorable terms, like high interest rates and frequent auto-draft payments. Working to build a better business credit score can potentially put you in a better position to qualify for more advantageous loan terms. And while there are a variety of factors that can affect your business credit score, and each bureau has different criteria, here are a few general tips.
Opening Accounts to Build Your Credit History
One way to start establishing a business credit history is to pay your business expenses with a commercial account — not a personal account. Business credit cards affect your credit score. It can also help to find out which of your vendors report to the agencies. For those that don’t report payments, you may be able to manually add them to increase the trade lines on your account.
Consistently Making Payments
Just as with your personal credit score, paying your bills on time has a large influence on your business credit score. Late payments are listed on your credit report and the scoring models use that data to determine how likely you are to pay future bills on time. If lenders see multiple late payments and delinquent accounts, they’ll likely be more hesitant to offer you financing.
Checking Your Report for Accuracy
Make sure there aren’t any errors on your business credit report. One common mistake is finding information that actually belongs to another company. Also check to make sure the age of your business is correct, since a longer history can contribute to a better score. Finally, look for any red flags that might indicate identity theft, such as accounts in your business’s name that you never opened.
Lowering Your Credit Utilization
Another part of building your business credit is managing your debt well. Many lenders may view large loan balances as a sign of cash flow issues, so it may be wise to try to keep your credit utilization ratio as low as possible.
Ways to lower your business’s credit utilization ratio may include paying down balances or asking for higher credit limits from existing creditors — but not drawing on the funds. Just having that extra available credit can lower your credit utilization and may show that your business effectively manages cash flow and debt. Note that some bureaus’ formulas do not weigh credit utilization heavily.
Recommended: How Credit Utilization Impacts Your Credit Score
The Takeaway
Understanding your business credit score is a process that provides you with a wealth of information. The more you know about your company’s credit history, the more prepared you’ll likely be to apply for financing when you need it. Plus, you can actively work to build your business credit score, knowing which areas are important.
If you’re interested in exploring your small business loan options, SoFi’s marketplace can help.
If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.
FAQ
How does a business credit rating work?
A business credit rating is a score created for a business, not a person. Ratings are determined from the business credit report — including how many employees, age of business, payment history, and amount owed — and shared with those interested in checking out a business’s financial soundness. Potential lenders and partners use a credit rating to help decide if your business will be a good risk.
Who tracks business credit scores?
The major bureaus tracking business scores are Dun & Bradstreet, Equifax Business, Experian Business, and FICO.
Can you find your business credit score for free?
The Fair Credit Reporting Act, which gives you the right to free personal credit reports for major credit bureaus once a year, doesn’t give the same access to business credit. It’s difficult to get ongoing access to all your business credit reports for free, but you might get partial business credit information for free or do a one-time pull of a full report.
Photo credit: iStock/AzmanJaka
SoFi's marketplace is owned and operated by SoFi Lending Corp. See SoFi Lending Corp. licensing information below. Advertising Disclosures: SoFi receives compensation in the event you obtain a loan through SoFi’s marketplace. This affects whether a product or service is featured on this site and could affect the order of presentation. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
SOSMB-Q424-022