Business Credit Score: Everything You Need to Know

Just like you have a personal credit score that lenders use to gauge your creditworthiness, your business also has a credit score. However, your business credit score differs from your credit score in several ways. Here’s what you need to know about business credit scores and why they matter.

How Business Credit Scores Work 

Credit reporting agencies generate business credit scores using information from your business’s credit reports. Similar to your credit reports, your business credit report includes your payment history, the types of credit you have, the amount of debt you owe, and more. Based on this information, the business credit reporting agency assigns your business a score that lenders can use to assess your creditworthiness. 

One of the significant differences between personal and business credit scores is that individual credit scores are typically based on a model created by FICO. In contrast, business credit scores can be generated by various agencies using different models. It means that there’s no one universal-business credit score; instead, there are many other scores that lenders may consider when making lending decisions. 

How Is My Business Credit Score Different from My Personal Credit Score? 

Although both personal and business credit scores are based on similar factors, there are some critical ways in which they differ. One of the most significant differences is that businesses usually have more lenient borrowing requirements than individuals. That’s because companies typically have multiple sources of income and assets that they can use to repay loans. As a result, businesses can often qualify for loans with higher interest rates and longer repayment terms than individuals with the same credit score. 

Another key difference between personal and business credit scores is their use. Individuals primarily use personal credit scores to qualify for loans and lines of credit. In contrast, businesses use their credit scores for vendor management purposes. Companies with high credit scores are more likely to be approved for favorable terms by suppliers than those with lower scores. 

Why Business Credit Scores Matter 

Your credit score is essential because it’s one factor that lenders look at when considering you for a loan or line of credit. Similarly, your business credit score is vital because it’s one-factor lenders look at when considering your business for financing. In other words, having a solid business credit score can help you get approved for funding to grow your business. 

How can I get a business credit report? 

There are a few ways to get your business credit report. The easiest way is to request a copy from a central business credit reporting agency, such as Dun & Bradstreet or Experian Business Credit services. You can also get a copy of your business credit report by requesting it from your lender or creditor. Remember that most lenders and creditors will only give you a copy of your account if you’ve been denied financing or are already their customer. 

How do I build my business credit score? 

If you’re starting, one of the best ways to make your business credit score is by getting listed with D&B. You can do this by filling out D&B’s free registration form. Another easy way to build your score is by paying all your bills on time and keeping your balances low on any outstanding loans or lines of credit.

A good business credit score can give you access to the financing you need to grow your company. If you’re unsure where your business stands, now is an excellent time to check your business credit reports and scores from all three major business credit reporting agencies. You can get started using a service like Nav to get unlimited access to your Experian and Dun & Bradstreet business credit reports and scores for free.    

 A strong business credit score is essential for small businesses looking to secure funding and grow their company. By understanding how Business Credit Scores work and why they matter, small business owners can work to improve their business credit Scores and increase their chances of securing the financing they need to sustain and grow their businesses.