Unlike years ago, when many financial institutions based credit decisions solely on the personal FICO score, today it’s also considered your company’s credit report. Therefore, it’s time for business owners to build and improve the business credit score for their business to get the most favorable rates and terms for financing. While personal credit scores generally fall on a scale of 300 to 850, business credit scores range on a scale from 1 to 100. When it comes to business credit scores, you’ll probably notice right away that they don’t fall into the same numerical range as personal credit scores.
Therefore, it’s essential to stay away from websites that promise free business credit scores and reports, as they are most likely a scam. Many small business owners try to avoid mixing personal and business credit cards and lending strategies. This makes sense, as a poor business credit score can negatively affect your personal credit score, while a bad personal credit score can work against you when applying for small business financing. Unfortunately, it can be very difficult to avoid tangling up personal and business finances, as many business financing options still require you to provide a personal FICO score.
A personal score ranges from 350 to 850, and you can request a free credit report each year to check your status. The big three business credit bureaus are Dun & Bradstreet, Equifax and Experian. Each of those business credit bureaus contains information from lenders, business credit checks suppliers, and sellers. Every business credit reporting agency uses the Finance Exchange small business report to collect data. The agencies also collect information from business credit reference agencies about bankruptcies, liens and lawsuits involving companies.
Many small business owners don’t realize that business credit scores are clearly separated from personal credit scores. Checking your business credit score does not affect your personal credit score and vice versa. Second, anyone can buy a business credit report, while their personal credit history is largely private. Third, there is more variation in the way business credit scores are calculated between the three agencies. Finally, your business credit score can range from 0 to 100, as opposed to 300 to 850 for personal scores.
The better the business credit report, the higher the loan limits that your business may qualify for. Work on your business credit reports now and enjoy all these benefits, among many others. Just like your personal credit score, the most important factor that makes up your business credit score is your payment history, whether you make enough timely payments on your debts.
Here are some details on how to check your business credit score with each of the credit reference agencies that determine business credit scores, Dun & Bradstreet, Equifax, and Experian. Having great personal and business credit scores can help your business in many ways. You may also be able to borrow more money at a lower interest rate from lenders and credit card issuers. There are consumer and business credit scores based on consumer and business credit reports.
The way they see it, the higher your credit scores, the greater your chances of paying off debts on time. This comes into play when applying for credit cards or loans and is determined using information from your personal credit reports. Your business credit profile and credit scores are largely based on information that banks and the companies you operate with send to credit bureaus that generate business credit reports. Small business lenders rely on business credit scores from multiple credit rating agencies to decide whether or not to lend to small businesses. The business credit score also helps lenders determine the size of a loan they are willing to make. Lenders look at factors such as whether your company has paid off previous debts on time, how quickly you pay suppliers, and how much revenue you’ve generated over time.