A good business credit score offers many benefits. It can help you secure business financing, establish better partnerships, get lower interest rates from lenders, get better terms from vendors and insurance companies, and even increase the value of your business.
Needless to say: It’s an important number to know if you’re a small business owner
Your credit score is different from your credit report, but to understand one, it’s important to understand the other. So how do you find your business credit score? How do you read a business credit report? Here are a few things you should know before you get started.
How To Check Your Business Credit Score and Business Credit Report
You can check your business credit score and business credit report with one of the three major business credit bureaus. Unlike your personal credit score, you may need to pay to access the information — and your business credit score and business credit report will likely look different with each of the bureaus.
Understanding your business credit reports can help you improve the financial health of your company and help you build business credit. It may seem a little overwhelming, but it’s not as complicated as you may think. Here’s how to check your credit score with each of the three major business credit bureaus.
Dun & Bradstreet
To check your business credit score with Dun & Bradstreet, you may need to set up a DUNS number. Your business will not automatically be added to their system, so your business credit file will likely be incomplete until you sign up. Getting a DUNS number is free, though it can take around 30 days.
After registering, Dun & Bradstreet will calculate your Paydex score — which is your business credit score. You may also receive a business failure score, a delinquency score and some other ratings as well. Each of these ratings is an indicator of your business’s financial health.
Dun & Bradstreet has a number of different tiers that allow small business owners to monitor their business credit.
- CreditSignal. This is the free tier. You won’t get full access to your report, but you’ll get your Paydex score and will be notified of credit inquiries and any changes to your score.
- CreditSignal Plus. This tier costs $15 a month, but you’ll have access to five scores and ratings including your Paydex Score and Delinquency Risk Score.
- CreditMonitor. At $39 a month, this is their most expensive option. With this option you get full access to your business’s credit file and access to all your business’s financial health scores and ratings.
You can also find your business credit score and report through Experian. You’ll need to pay a fee to access your information, but you’ll receive your Experian business credit score, your financial stability risk rating, payment trends and history of your business accounts.
- Experian CreditScore Report. For a one time fee of $39.95 you can get your business credit score and a summary business credit report.
- ProfilePlus Report. A little more expensive, but for a one time fee of $49.99 you’ll get your business’s credit score and a more detailed credit report.
- Business Credit Advantage Plan. This plan costs $189 per year, but you’ll have ongoing access to your business credit score and report so you can monitor your business’s creditworthiness and financial health.
An Equifax business credit report also includes multiple scores used to assess your businesses creditworthiness. You’ll see your businesses credit risk score, business failure risk score and payment index.
Through Equifax you can pull a credit report for $99.99 or purchase a bundle of five credit reports for $399.95. You can also add on business credit monitoring for an additional monthly fee.
What’s a Good Business Credit Score?
Your business credit profile may look different at each of the three major business credit bureaus. They each have their own system of ratings and scores they use to evaluate your company.
Dun & Bradstreet Paydex Score. This is probably the most widely used number for your business credit score. Scores range from zero to 100. Anything over 80 is generally considered a good business credit score, while scores below 50 may signal that you’re a higher credit risk.
Experian Business Intelliscore. Business credit scores from Experian also range from zero to 100. Again, having a score of 80 or above is generally considered a good business credit score.
Equifax Business Credit Score. Equifax actually uses three scores to rate your business’s credit. The other bureaus may also offer other ratings and scores as well, but they also offer over all Paydex or Intelliscores.
- Your business credit risk score is on a scale from 101 to 992 and it predicts how likely you are to be delinquent.
- Your business failure score rates the possibility of your business declaring bankruptcy in the next 12 months. Scores range from 1000 to 1880.
- Your payment index is based on your business’s payment history. Scores range from zero to 100, with 90 to 100 meaning you make your payments on time.
How Is a Business Credit Score Calculated?
Your business credit score is calculated similarly to a personal credit score — but there are a few additional factors. Also, remember that only accounts held in your business’s name will affect your business credit history. Your personal finances won’t have any effect on your business score.
Payment history. One of the biggest factors that contributes to your business credit score is your payment history. This can include payments on small business loans, lines of credit and business credit cards, as well as invoices from vendors, insurance companies and more. A good repayment history will boost your score, but late or missed payments will damage it.
Credit utilization. This percentage is based on the amount of credit your business has used versus the total amount of credit available to you. Keeping this percentage at a reasonable rate can help your score.
Account age. Older, established business accounts (that are current) can help give your business credit score a boost.
Tradelines. A tradeline is any established credit account that appears on your credit report. Having established tradelines can show that your business is adept at handling and managing your finances.
Business age and size. Older businesses generally have higher credit scores because there is typically a lower chance that they will go under.
Industry risk. Businesses in riskier industries will usually take a hit on their credit score because of the higher risk of failure compared to more stable or “safe” industries.
How To Read Your Business Credit Report
Though your business credit report will likely look a little different at each bureau, they’ll generally contain the same breakdown of sections and information.
Business information. Your credit report will contain specific background information about your company. It will list things such as your location, contact information, any parent companies or subsidiaries, business size and years in business.
Business credit scores and Ratings. Your scores will also be detailed in your business credit report. Depending on which bureau you’ve received your credit report from, the ratings and score may have slightly different meanings, but in general they help evaluate the credit and financial health of your business.
Credit summary. This section will show things like the number of established tradelines, total amount of credit available, new business credit inquiries, credit utilization and balances.
Payment history. Your business credit report will also have detailed information about your repayment history. You’ll be able to see payments made on your business credit card, small business loans, invoices owed to vendors and more.
Public records. Your credit profile will also include any public records like UCC filings, liens and debts sent to collections.
Advice from the experts: What do business owners overlook most on their business credit report?
Don’t overlook the small details.
“The presence of errors or inaccuracies on the credit report is a common oversight. Small business owners should thoroughly examine their credit reports to ensure that all information is correct and up to date. Even minor mistakes, such as a misspelled name or an incorrect address, can result in credit denials or higher interest rates.
“Furthermore, small business owners should be aware of their credit utilization ratio, which is the percentage of available credit that is being used. A higher credit utilization ratio can have a negative impact on credit scores and may indicate to lenders that the company is overextended or financially struggling. To maintain a healthy credit profile, small business owners should aim to keep their credit utilization ratio below 30%
“The age of credit accounts is another important factor that is frequently overlooked. Lenders prefer long credit histories because they indicate a stable and reliable borrower. Small business owners should avoid closing old credit accounts because this reduces their credit history and may harm their credit score.
“Overall, small business owners should review their credit reports on a regular basis and pay attention to these key factors to maintain a healthy credit profile and improve their chances of obtaining financing
Michael Hammelburger, CEO
The Bottom Line Group
Michael has been working as a Financial consultant for small and midsize businesses since 2010. In 2019, Michael founded The Bottom Line Group, an expense reduction consulting firm helping companies reduce their expenses by thousands of dollars by focusing on areas not typically looked at by the leadership team.
Being thorough will help you avoid issues down the road.
“Errors on the report: Small business owners should thoroughly review their credit report for any errors that could be affecting their credit score. Errors could include incorrect personal or business information, outdated account balances, or even fraudulent activity. It’s important to dispute any errors you find with the credit bureau to have them removed from your report.
“Late payments: Small business owners should also pay close attention to their payment history. Late payments can significantly impact your credit score and could make it difficult to secure financing or credit in the future. Make sure that you’re making payments on time and that they’re being reported accurately.
“Debt utilization: Another important factor that small business owners should consider is their debt utilization. This is the amount of credit you’re using compared to the total credit available to you. Ideally, you should be using less than 30% of your available credit, as high utilization rates could negatively impact your credit score.
“Length of credit history: Small business owners should also consider the length of their credit history. A longer credit history can often be seen as a positive factor by lenders and could help improve your credit score. Make sure to keep old accounts open, even if you’re not using them, to maintain your credit history.
“Small business owners should be vigilant when checking their credit reports. Pay close attention to errors on the report, late payments, debt utilization, and the length of your credit history. By taking the time to review your credit report and address any issues, you can help ensure that you’re in good standing with lenders and improve your chances of securing financing or credit in the future.”
Jon Morgan, CEO
Jon Morgan is the CEO and Editor-in-Chief of Venture Smarter, a leading consulting firm that specializes in helping startups and small businesses scale and grow. With over 9 years of experience in the industry, John has a wealth of knowledge and expertise in areas such as strategic planning, market research, and financial analysis. Born and bred in Georgia, he has worked with a wide range of clients, from early-stage startups to large corporations, and has a proven track record of helping them achieve their goals. In addition to his consulting work, Jon is also a sought-after speaker and author, sharing his insights on business growth and success with audiences around the world.