Understanding Your Business Credit Score

Just as you have a personal credit score, so does your business. Your business credit score is important – it informs potential lenders how likely you are to repay them in a timely fashion.

The Difference Between Personal and Business Credit Scores

Personal credit scores use ratings devised by the Fair Isaac Corporation (FICO) and range from 300 to 850. Business credit scores usually range from zero to 100.

Why do I Need a Business Credit Score?

Establishing a solid business credit score increases your chances of obtaining a small business loan or a credit line with favorable terms. A good business credit score may also keep your insurance rates low. Here’s some information on one of the three main business credit bureaus.

Dun & Bradstreet (D&B)

D&B uses a score they call a Paydex score between zero and 100 based on payment data reported to the bureau. To get a Paydex number, you first need to file for a DUNS number through D&B’s website and supply payment records from at least four vendors. You can increase your Paydex score by repaying debts on time or ahead of schedule.

Dun & Bradstreet Credit Reports

D&B will also give you a Commercial Credit Score and a Financial Stress Score. The Commercial Credit Score (101 to 670) predicts how likely it is that you will have delinquent payments within the next year. The Financial Stress Score (1,001 to 1,610) predicts the likelihood that your business will fail during the following year. The lower the number, the higher the probability of delinquency or failure.

If you have an excellent business credit score, you may be eligible for a loan from a tradition lender such as a bank. However, if you still need to build up your business credit score, Business Capital Providers is here to help you out. Contact us for more information.