Different from a personal credit score, your business credit score is focused precisely on your business. This means it takes into account your timelines as far as payments to creditors and suppliers. Have you missed payments? Is everything up to date? Additionally, a business credit score may factor in the overall revenue stream, industry, and size.
Some owners may not even realize that their business has a score per se; however, it is important to note that agencies do start to create a file when you open a bank account, for instance, or perhaps have obtained a new employer identification number.
There is no guaranteed way to improve a business credit score, but Experian suggests a few steps below that you can take to ensure that your business credit report reflects the best possible score for your situation.
- Check your business credit report regularly and verify that the information is accurate and up-to-date.
- Establish business credit with companies that report trades. Remember, not all business creditors report their trade information.
- Pay your creditors on time. Historical payment behavior with previous creditors plays a major role in determining your business credit score.
In terms of business scores, disparate from personal scores, the main reporting agencies are Dun & Bradstreet, Experian, and Equifax. Dun & Bradstreet, as well as Experian, both use a 0 to 100 scoring scale. Equifax diverges from this and utilizes a range of three scores with differing scales.
Also, keep in mind that there is a FICO Small Business Scoring Service (SBSS). This score is particularly popular with lenders primarily because it is based upon a combination of scores, including scores from the three agencies in addition to your personal score. It is thus understood as a more comprehensive means of evaluating your company’s ability to repay a loan.
Unlike your personal score, business scores can be pulled at any time and are far less regulated. So you should monitor your company’s score regularly to confirm it is current and accurate.
At First Union, we believe in looking at all aspects of our client’s business—which means a score will not stop you from getting funded. We would love to discuss your options and review what our loan program can do for you. Call us at 863-825-5626 today!