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Checking and Understanding Your Business Credit Score

Checking and Understanding Your Business Credit Score
Nancy Bilyeau
Nancy BilyeauUpdated March 25, 2022
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
A business has its own credit report that reflects the risk profile of the company, just as you have a personal credit score that is like a snapshot of your personal credit profile. Why is it important for me to check my business credit score?Your score plays a crucial role when you want to expand your business, get loans, and qualify for competitive terms. Lenders look to business credit scores to decide about loans. Suppliers and other businesses use it to evaluate whether they want to work with your business.Before applying for any type of financing for your company, it’s important to learn about your business credit score. You need to know how to check your business credit score and how to manage it to your best advantage.

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 a few sources for business credit scores: Dun & Bradstreet, Experian, and Equifax are the ones most people use. 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 ScoreTM, 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. Higher scores are generally preferable to lenders. The Business Failure Score ranges from 1,000 to 1,800 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: Minimum Credit Scores for Business Loans

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 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. 

How to Get Your Credit Score

So, “What is my business credit score?” you may ask. 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 available.

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 $179 a year.

Dun & Bradstreet

Dun & Bradstreet offers a free business credit report with basic monitoring services for 14 days. Within that time frame, you can view up to four Dun & Bradstreet scores, plus get data on inquiries, legal events, and payment summaries. You’ll also be notified via email anytime there’s a change on your report. After the 14-day window is over, you can upgrade to one of three paid monthly plans that come with a variety of benefits.To get going, you will need a D-U-N-S Number, 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 can also get it faster, in five business days, when you set up a CreditBuilder Plus account for $149 a month.

Equifax

You can get a single business credit report from Equifax for $99.95. The information on the report includes details such as a credit summary of your business, public record, and payment trends. You’ll also see two risk scores: the Equifax Business Credit Risk Score, which ranks your likelihood of becoming delinquent on a loan, and the Equifax Business Failure Score, which assesses the business’ likelihood of failure (or bankruptcy) in the next 12 months.

FICO

A business’ FICO® SBSS score is created when a loan application is filed. 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. 

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 financing, which is why it’s important to pay attention and actively manage your score. The SBA notes that “insufficient or delayed financing” is one of the most commonly cited reasons for a failed business. Paying attention to your business credit score can help give you more options if you ever need to secure financing.Even if you get approved for financing, a stronger 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 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 and avoid the consequences of a low credit score your company may not deserve.

4 Common Strategies for Improving Your Business Credit Score

While bad credit business loans are available, they typically come with unfavorable terms, like high interest rates, frequent auto-draft payments, and/or collateral requirements. 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 can 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 the largest 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 very heavily. 

Bottom Line

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 and strengthen your business credit score, knowing which areas are important. If you're interested in exploring your financing options, Lantern by SoFi can help. With our online lending tool, you can access multiple loan offers matched to your needs and qualifications with just one application.

Frequently Asked Questions

How does a business credit rating work?
Who tracks business credit scores?
Can you find your business credit score for free?
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About the Author

Nancy Bilyeau

Nancy Bilyeau

Nancy Bilyeau writes about student loans, mortgages, car insurance, medical debt and many other finance topics for Lantern. A veteran of the magazine business, she has edited stories on personal finance for Good Housekeeping and DuJour magazines and has written articles for The Wall Street Journal, Readers' Digest, Parade, Town & Country and Lifetime/A&E, among others. She is a graduate of the University of Michigan.
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