Do You Know Your Business Credit Score?

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Last Updated: March 9th, 2021

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Guest Post by Elizabeth Aldrich

If you don’t know your business credit score, you’re not alone. A survey conducted by Nav shows that almost half of small business owners don’t even know that business credit exists.

That oversight doesn’t mean that business credit scores aren’t important. A good business credit score will get you the best business loans and lines of credit, while a bad one will bar you from borrowing money at all. Given that a lack of growth and cash flow were revealed as the main obstacles facing small business owners in the Nav survey, it’s clear that access to low-cost funding options a necessity for business owners.

What is a business credit score?

While your personal credit score looks at your relationship with credit, your business credit score looks at your business’s relationship with credit. A number of credit reporting agencies calculate business credit scores, including Equifax, Experian, and Dun & Bradstreet, and each has its own scoring method. Your business credit score can range from 0 to 100, although if you’re just starting out and have never used a business loan or business credit card, you might not even have a business credit score.

Why a good business credit score matters

Many business owners don’t think they need to pay attention to their business credit score. However, even if you don’t plan to borrow money for your business right now, you should still know your business credit score. Here’s why:

  • It helps you qualify for the best small business loans.
    As your business grows, a small business loan is a quick and effective way to support that growth. It allows you to invest in more capital and scale your business without being beholden to outside investors. However, you’ll need a good business credit score to get approved for the best rates on business loans.
  • It can provide access to emergency funding.
    From equipment failure to lawsuits, it’s not uncommon for a business to face unexpected expenses. If your business is ever in need of fast cash, borrowing money might be your only option. When this is the case, a good business credit score can come to the rescue, allowing you to qualify for the best business loans and lines of credit.
  • It convinces others to trust your business.
    Unlike your personal credit score, your business credit score is public information that anyone can look up. Vendors and suppliers can look at your business credit, and a good score makes them more likely to do business with you.
  • It can help you earn credit card rewards.
    If your business spends a lot, you might as well be rewarded for it. A good business credit score can help you qualify for the best business credit cards, and many of them offer lucrative rewards in the form of cash back or travel points.

How your business credit score is calculated

Each credit scoring agency calculates your score differently, but the following factors are typically considered:

Credit accounts

Credit accounts under your business name, such as business loans or business credit cards, are a main determining factor in your business credit score. Credit scoring agencies will look at the following factors:

  • Payment history — On-time payments will help you build business credit while missing payments can tank your score.
  • Length of credit history — If your business has been using credit for a long time, it’ll be easier to build a good business credit score. On the other hand, if you’re just starting out, you might not have a business credit score at all.
  • Credit utilization — Bumping up against your credit limit regularly will likely decrease your credit score. Instead, you want to maintain low balances on lines of credit like business credit cards in relation to your credit limit.
  • Number of credit lines — Showing you can juggle multiple lines of credit responsibly is more likely to boost your score than only having one line of credit.

Collections information

If you fail to pay your business’s bills (rent, electricity, etc.) on time, those missed payments can be reported to the agencies that determine your business credit score. Furthermore, unpaid accounts can be sent to collections if left overdue for a long time, at which point your business credit score is likely to take a severe hit.

Public records

Any judgments made against your business in court, liens, or bankruptcies will show up on your public records. These are also used to calculate your business credit score.

The following factors can also influence your business credit score:

  • Length of time you’ve been in business
  • Your business revenue
  • Your assets
  • Your industry’s risk level

How to check your business credit score

If you don’t know how to check your business credit score, it’s fairly easy. You’ll want to get your score from each of the three main business credit scoring agencies by contacting them at the links listed below.

  • Dun & Bradstreet — Purchase your business credit report online or call (844) 238-1514
  • Equifax — Contact them online or by phone at (866) 519-4800
  • Experian — Get your business credit report and score online

The bottom line

Knowing your business credit score helps your business plan for the future. Once you have your business credit report in hand, you can take several steps to improve your business credit score, from opening a business credit card to decreasing your current debt levels. Don’t let a bad or nonexistent credit score get in the way of your business’s growth.

Elizabeth Aldrich is a freelance writer covering personal finance, business, and travel. Her writing has appeared in The Motley Fool, Business Insider, Yahoo! Finance, LendingTree, Student Loan Hero, FOX Business, and more.

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