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Just as each person has a unique credit score, each business also has its own credit score. If you’re applying for financing, it’s important to know how to check a business credit score. This score will tell you how likely you are to get financing for your business, and what your options are.
Some credit bureaus will provide you with a free business credit score, and this information is highly useful for your business. Let’s examine what factors affect your score and how to find a business credit score.
If you’re nervous about checking your business credit score, relax. Requesting your credit report does not affect your credit score. So-called “soft inquiries”, simply checking your score, will not have a negative impact on your business with financers.
(That’s what happens when you pre-qualify; simply, you see what financing you are eligible for without harming your credit score)
A “hard” credit check, on the other hand, is made when you are ready to apply for financing. This type of credit check is done when you apply for certain loans, credit cards, mortgage, etc. A hard inquiry may affect your credit score, which is why it’s important to do your homework in advance.
If you regularly soft check the credit score of a business, you can resolve potential issues with your credit in advance.
Your Business is More Than its Credit Score
If you don’t know how to check your business credit score, you’re missing out on essential information. You should know your score to get a better read on your financing options for everyday business expenses, equipment and more.
You can also check your business credit score for free, which we will discuss later.
Why Should I Get My Credit Score?
Monitoring your business credit score empowers you to make more informed decisions for your business and alerts you to any potential fraud. You can review your credit report and take care of any unresolved issues which are lowering your score. Business credit reports often include data that you may not have known.
Your business credit report will determine:
- How much financing you’re eligible to receive
- Repayment terms
- Interest rates
- Insurance premiums
- And more
Business credit scores change, so don’t assume your score from ten years ago is still the same today. Here are a few key reasons you should stay up-to-date:
Resolve Problems With Your Credit
You may not be aware of issues affecting your credit score. Reviewing your reports keeps you up to date and enables you to fix problems right away.
You may have an outstanding loan balance, an old business credit card you forgot about, or a payment that didn’t get processed properly. The report identifies potential issues, so you can address them and boost your credit score.
Reports aren’t always perfectly accurate. By examining your business credit report, you can correct any errors before they have a negative impact on your credit.
If you find an error, contact the credit bureau to begin the dispute process. Provide proof of your claim and the bureau will investigate.
Learn About Your Business and Plan More Effectively
Checking your business credit score enables you to gain market insights, data from lenders and suppliers, and an in-depth view of all your finances. Credit reports are a key part of the financial success of your business.
Something that isn’t considered as often: If your business has strong financial standing, you become a more appealing prospect for other businesses to partner with.
What Is Your Business Credit Score Based On?
Although you’re probably familiar with your personal credit score, a business credit score is determined by similar factors, like when you pay your bills, how much debt you have, and the kind of industry you’re in.
Business credit scores also do not use the same scoring system as personal credit scores. Your score is determined by the information in your business credit report.
What Is My Business Credit Score?
Business credit scores range from 1 to 100. Higher scores indicate a lower risk for potential lenders. A good business credit score makes your business an attractive prospect for financing, and also means you’re likely to pay lower rates on financing.
Your business credit score is used to determine how likely you are to repay your financing and what level of risk is associated.
What is a Good Business Credit Score?
In the US, generally, 75 or higher is the credit score needed for a business loan. This score is considered strong, and likely grants you access to more financial support.
If your score falls below the minimum credit score for a business loan, it does not mean you can’t get financing. Unlike traditional lenders, Credibly looks at your business’s potential to get the whole picture.
What Is a Business Credit Report?
Want to know the first step in how to check a business credit score? You’ll need to apply for a credit report. Unlike a personal credit report, a business credit report is public and may be accessed by anyone. Checking the business credit score of another business is a very wise idea if you are considering working with them.
A business credit report compiles all relevant information about your business’s creditworthiness. This information includes past payment behavior, business finances, bankruptcies, and more.
The report examines your business’s past behavior and uses information from banks, collection agencies, and industry groups.
What is a Business Credit Bureau?
Business credit bureaus are the organizations that prepare your business credit report. There are four main bureaus: TransUnion, Dun & Bradstreet, Experian, and Equifax. Although there are other options, these are the most widely used bureaus.
Each of these bureaus uses its own set of data to determine your business credit score. Your score is, therefore, likely to differ depending on which bureau you use.
Experian looks at three main factors when determining your business credit score.
- Credit obligation information: Historical payment habits, overall credit utilization, and any outstanding balances
- Legal filings: Any liens, judgments or bankruptcies, and how much money was involved
- Company background information: Info from public records, filing offices, credit card companies, collection agencies and marketing databases
TransUnion looks at multiple factors, including a detailed profile of all business owners.
- Business profile: Examination of each owner of the business, and relevant market data about the business
- Legal information: Any court filings by or against the business
- Past financial information: Bankruptcies, liens, collections and other data about historical payment patterns
- Supplier and trade data: Whether your business has repaid its suppliers for goods or services, and how long the repayment process took
Did you know…
Source: Fit Small Business
- Credit information: Your business’s total current credit exposure and payment history
- Commercial delinquency: How likely your business is to become delinquent or go bankrupt
- Industry trade summary: How your business compares to other similar businesses in your industry
Dun & Bradstreet
Dun & Bradstreet’s PAYDEX score is one of the most widely accepted credit scoring methods.
- Viability rating: The future outlook of your business
- Failure/delinquency score: If your business will seek legal relief, fail to pay its debts, become severely delinquent, or go into receivership within one year
- Historical payment performance: When your business has paid its bills, and any bankruptcies, lawsuits, etc.
How Do I Check My Business Credit Score?
Now that we’ve gone over the importance of your score, you’re probably wondering how to check your business credit score. Some of the larger credit bureaus offer a free business credit score and free report.
Dun & Bradstreet provides a free credit report. An Equifax business credit report is also free. Experian provides business credit reports for a fee.
Does My Credit Score Make My Business Eligible for Financing?
Now that you know how to find your business credit score—and just how easy it is to get it—here’s what you need to do to get financing.
First, figure out how much you qualify for when you apply. You could qualify for up to $400,000 in financing.
Second, with financing approval in as few as 4 hours, you’re well on your way to securing the funds you need for your business plans.
Third, get funding deposited into your account within 24 hours. It’s really that simple.
Low Credit Score? There Are Options
If you panicked reading the “what’s a good business credit score” section, you’re not alone. Business credit scores range from 1 to 100, and if you fall under 75, does that mean you can’t get financing?
Credibly offers multiple alternative options that traditional lenders can’t provide. We look beyond the credit score to your business’s strength
Speak to a Financing Expert