Not all credit scores are created equally. You likely already know that you have a personal credit score; it’s what you need to buy a car, get a mortgage, credit card, or even pass a background check. You probably also already know that there are three bureaus (Experian, Equifax, TransUnion) that report your credit scores.

What you may not have known is that your small business has a business credit score. Just like your ability to pay your credit card bills and mortgage payments on time factors into your credit score, your ability to handle your business’s debt and accounts payable, among other factors, all go into your business credit score.

Your business credit score can impact your company and future opportunities in a major way, so we’re outlining everything you need to know about your business credit scores and how to use them.

What is a business credit score?

Just like a personal credit score, your business’ financial health and trustworthiness is measured by a number of factors that are summarized by a number called a business credit score. Having “good credit’ refers to your ability to secure financing at agreeable terms.

Beyond just this number, however, is a credit report that details your financial history and behaviors. Lenders, insurance companies, and other interested parties may consult your credit report to see any outstanding debts, collections, and history of late or on-time payments. Credit reports are generated by business credit bureaus, notably Experian, Equifax, and Dun & Bradstreet. 

Just like a personal credit score, you want the highest possible number. A business credit score of 140/300 is a good and healthy minimum score that will allow you to acquire financing.

Why do I need a business credit score?

A business credit score is used to determine how likely you are to pay your bills on time, and to indicate to lenders how big of a risk you might be. Your credit score is used to determine interest rates, what types of loans you can receive, how much you’ll qualify for, and how to construct repayment terms. Additionally, other businesses may use your business credit score to decide if they want to do business with you, or to negotiate a beneficial business contract.

How is a business credit score calculated?

Just like personal credit scores, business credit scores come from multiple reporting bureaus. These reporting bureaus are Dun & Bradstreet, Experian, and Equifax, and they can help you get better financing. And similar to personal credit scores, business credit scores are not all created equally. When you do not have established business credit, that’s when your personal credit score comes into play.

4 most important credit scores for business owners

Credit score range Acceptable minimum for funding Excellent score
Personal 350-850 600 800
D&B PAYDEX 1-100 50 80+
FICO SBSS 0-300 140 180
Experian 1-100 51 76

Personal credit score

As you learn more about business credit and get more into the details of potentially building it or growing your profile, be sure not to neglect your personal credit. Many small businesses start out using the owner’s personal credit score to secure early financing, which is a necessary step. However, your personal credit can negatively impact your business, and visa versa. It’s recommended that you separate your business from personal credit as soon as you can to keep both pristine. 

If you’re years into your business and your business credit score is less-than-stellar, some services may take your personal credit score into account. Taking care of your personal credit score can bail you out if you let your business credit fall apart. By keeping things up on the personal credit side of things, you can have a great plan B for your business and stay on track for your personal goals. Your personal credit score is reported on a scale of 350-850, and you’re entitled to one free credit report a year for you to know what you can work on or fix to have a healthy profile.

D&B PAYDEX Score

The D&B PAYDEX Score is reported by Dun & Bradstreet. With a scale of 1-100, 100 being a perfect payment history, it’s slightly simpler than personal credit to gauge where you’re at off the bat. While your social security number is associated with your personal credit and your EIN number with your business credit, you also need a D-U-N-S number to access your D&B PAYDEX Score.

With the special calculations that Dun & Bradstreet use, paying your bills on time, and especially early, is key and can work in your favor. If you only pay your bills on their due date, the highest rating you can get is 80, 100-rated payments are those that are made 30 days early. If you want a credit score that takes into account your early payments, the PAYDEX Score is one to keep an eye on.

FICO® LiquidCredit® Small Business Scoring Service℠

Your FICO® LiquidCredit® Small Business Scoring Service℠ (SBSS score) can help you get some more favorable financing, since it takes into account many business factors. While having any of your credit ratings high is always excellent, the SBA (Small Business Administration) requires a SBSS score to consider your business for an SBA loan. SBA loans can, depending on the amount, come without much required collateral and with more desirable rates and terms.

PAYDEX scores come on a scale of 1-100, the SBSS score ranges from 0-300. Most lenders set their minimum score at 160, but the SBA reportedly sets their minimum at 140. By working to get your score above the minimum, you can open up your ability to get solid financing and grow your business.

Experian Intelliscore

Experian’s Intelliscore attempts to determine the likelihood of serious delinquency by your business for the next twelve months, all based on the business data available. Just like the PAYDEX score, the Intelliscore is measured on a 1-100 scale, a score of 1 being the highest risk, 100 being the lowest.

The Intelliscore is determined by over commercial and owner variables including tradeline and collection information, recent credit inquiries, public filings, new account activity, key financial ratios and other performance indicators. If you can come to your lender with a solid Intelliscore, you can potentially put their minds at ease and secure more favorable rates and terms than you would otherwise.

How do I find out what my business credit scores are?

In order to see your business credit scores you’ll need to check with the business credit reporting bureaus. For the D&B Paydex score you’ll need a D-U-N-S number in addition to your Employer Identification Number.  Your lender will calculate your FICO SBSS score based on a variety of factors such as age and size of business, and the scores available from other credit bureaus. You can find this score by working with an SBA-approved lender. 

Experian and Equifax are credit bureaus from which you can request a business credit report. The report will show your score as well as the contributing factors that inform that score. You can usually request a report once a year, or you can ask to see the report when it’s pulled for financing by a vendor or lender.

How can I improve my credit score?

If your credit score is on the low side, or you have yet to establish your business credit score separate from your personal credit score, there are a few key steps you can take to build a stronger score

  • Get a business credit card: Begin using a business credit card and paying it off regularly to build stronger credit. 
  • Check your report: If there is incorrect or unknown information on your credit report, you can use that to dispute or correct any problems for immediate boosts in score. 
  • Pay early: It’s not just about late payments—your credit score can be improved by “extra credit” for paying your bills and invoices early. 
  • Stay below 30% usage: If you have access to $10,000 in credit make sure your balance never exceeds $3,000. This is your debt-to-credit ratio and it directly impacts your credit score. Pay down any debts to below 30% of the available credit and you’ll see your score come up. 
  • Make sure you work with reporting vendors: Some of your purchases may not be reporting to credit bureaus, which means you aren’t getting credit for your on-time payments and trustworthiness. Make sure your cards and vendors are reporting all transactions to credit bureaus so you can build a strong score.

How can I protect my credit score?

You’ve worked hard for your business credit score—how can you make sure it stays strong? Once you’ve begun to establish your business credit score you can take the following precautions to make sure your credit score stays healthy. 

  • Monitor your credit: If you notice an unexplained dip or new item on your credit report, you can address it directly. You’ll be able to catch identity theft, fraud, and other concerns much more rapidly before they affect your future. 
  • Dispute issues: Sometimes collections and missed payments are mistakenly recorded and show up on your credit report. If you believe they are in error, don’t hesitate to reach out and file a dispute. It could help you improve your score and identify fraud. 
  • Separate business & personal: Converting your small business to an LLC can help you separate your personal credit from the business, which can protect your business from any changes in personal credit that might negatively impact your ability to secure business financing. 
  • Pay early: Set up all of your accounts to auto-pay early, so you have time to catch any complications that could lead to a late payment. Not only does paying early help you avoid the late payment punishments, it also shows you are a reliable business owner. Paying early prevents hits to your score and actually improves your business credit score. 
  • Manage business credit card use: Carefully monitor who has access to business credit within your company, and set enforceable budgets that keep you well within your comfortable limits. 

Your business credit score is well worth the time and effort it takes for establishing, monitoring, and improving. Build a stronger business credit score so that you can seize any opportunities that come your way. 

As part of our mission to make money smarter, Divvy reports customer credit performance to the Small Business Financial Exchange (SBFE®). That means you can use Divvy to build your business credit history and credit score for your business simply by paying on time. Learn how Divvy can help build your credit or see for yourself and request a demo of Divvy.

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