What is a Business Credit Score?
By Turtle Credit Team
Disclaimer / Advertiser Disclosure
- The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Information on this website may not be current. This website may contain links to other third-party websites. Such links are only for the convenience of the reader, user or browser; we do not recommend or endorse the contents of any third-party sites. Readers of this website should contact their attorney, accountant or credit counselor to obtain advice with respect to their particular situation. No reader, user, or browser of this site should act or not act on the basis of information on this site. Always seek personal legal, financial or credit advice for your relevant jurisdiction. Only your individual attorney or advisor can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, contributors, contributing firms, or their respective employers.
- TurtleCredit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.
You’ve heard of personal credit scores, right? It’s a figure that determines how trustworthy you are when it comes to lending money. It can determine a number of things: how much credit you can take out, the rate of interest, and even whether a lender will do business with you at all! What about a business credit score: is it the same thing? Well, it’s similar, but with some crucial differences. Let’s pull back the curtain and get the lowdown on what a business credit score is once and for all.
What’s the Same?
Like with personal credit scores, one of the most important factors in business credit scores is the consistency of paying your bills. Are they on time, all the time? That bodes incredibly well for any borrower, from the individual to the multi-billion dollar conglomerate.
Additionally, multiple different organizations determine a business’ credit score using their own unique (but relatively similar) methods, just like with a personal credit score. These organizations source their information from several third-party sources, including banks, trade associations, and other lenders. This also bears similarities to personal credit scores, although the organizations that determine these scores differ for personal and business clients.
What’s Different?
Typically, personal credit scores range from 300 to 850 (with higher being better), while the business equivalent ranges from 0 to 100. It goes without saying, then, that personal and business credit scores can’t easily be compared: a business with a credit score of 95 would be on top of the world, but an individual with the same score? Well, not so much…
On top of this, business credit reports are available for public access to any organization or individual willing to pay. On the other hand, personal credit reports are only accessible by the individual they pertain to and specific third-party organizations.
Finally, there are many methods of building business credit that simply does not apply to individuals. Applying for an employer identification number (EIN), establishing your business address, and officially incorporating your business are just three examples. For more ways of building business credit, take a look at our easy-to-follow guide.
| Business credit score | Score range |
|---|---|
|
Dun & Bradstreet PAYDEX |
0 – 100 |
|
Intelliscore℠ Plus from Experian |
0 – 100 |
|
FICO® LiquidCredit® Small Business Scoring Service℠ |
0 – 300 |
|
Equifax Business Delinquency Risk Score |
224 – 580 |
What Can a Good Business Credit Score Do for My Business?
Establishing and building a solid business credit score is just as important as doing so for your personal credit. It makes applying for specialized business loans and financing in general, much easier. It also increases the amount that lenders will be willing to lend you.
With business credit scores being publicly accessible, they can also serve as a good indicator for potential investors that your company is on the right track. Poor credit score, on the other hand, may scare prospective investors off.
Plus, maintaining a good credit score can help keep business insurance rates from rising too high. As your business grows, insurance rates will grow along with it; if your finances aren’t in tip-top shape, insurance fees can quickly become overwhelming.
If you’re a business owner—especially a small business owner—keeping a healthy credit score should be a top priority. If you’re looking to build your business credit score fast, check out our guide here!
Spread the word
Articles: Business Finance
A business credit score works similarly, just for a business instead of an individual. Simple enough, right? The question is: can a business’ credit score affect its owner’s personal score, and if so, how? Let’s find out.
The concept of credit is not just for individuals. Businesses need credit too! Of course, there is much more to it, and here is everything you need to know about business credit.
This is a step by step guide to get your Business Credit started and on your way to better cash flow.