FICO SBSS: A Quick Guide With Everything You Need

The FICO LiquidCredit Small Business Scoring Service (SBSS) is the business version of the well-known consumer FICO credit score. The FICO SBSS score ranges from 0 to 300 and assesses your company’s ability to repay debt obligations. It’s an essential part of your business because it’s used by lenders and other interested parties to evaluate your company’s financial history and status.

What Is FICO SBSS?

The FICO SBSS is a business credit scoring model that lenders and banks use to evaluate your company’s creditworthiness and risk level. Whether you apply for a business loan or a business credit card, your business credit scores can mean the difference between approval and denial.

While FICO is one of the most common scoring agencies, it isn’t a credit bureau, so it doesn’t collect business information like Dun & Bradstreet (D&B), Experian, and Equifax. Instead, FICO provides a scoring model that evaluates the likelihood of your company’s default on payment based on business credit reports from those credit bureaus.

How FICO SBSS Works

There are three components to the FICO SBSS score that you need to be aware of: how it’s calculated, its score range, and what it’s used for. For example, the FICO SBSS considers your company information, industry, and financial information to produce a score that lenders use when evaluating you for a business line of credit or loan. But that’s just a brief overview, let’s dive into the details to help your business credit journey.

How It’s Calculated

In some ways, FICO calculates the FICO SBSS score similarly to personal credit scores, using payment history and credit utilization to determine your credit score. However, the FICO SBSS score also includes business information, such as the following:

• Company information: FICO reviews company information, including the age of your company and how many employees work for your business.
• Industry: The kind of business you run can affect your business scores. Some industries are considered higher risk than others, so your credit scores will reflect that.
• Financial performance: Your business revenue, sales, and assets can reflect your business health and factors into your overall score.
• Payment history: Your payment history with lenders, vendors, and suppliers is one of the most important factors that make up your credit score.
• Credit utilization: Similar to your personal FICO score, your FICO SBSS score considers your total available credit compared to the amount credit your company is using, otherwise known as your credit utilization ratio.

FICO SBSS also takes into account your personal credit. It doesn’t just use yours―it also includes any business partners with at least 20% of company ownership. So, in addition to monitoring your business information, you should also keep an eye on your personal credit scores.

FICO SBSS Range

The FICO SBSS score ranges from 0 to 300, with 300 being the best score possible. If you are prescreening for a Small Business Administration (SBA) loan, you will need a minimum score of 155. However, most lenders require a score between 160 and 165. If your score is below 155, you will need to go through a manual approval process.

What FICO SBSS Is Used For

Although there can be several reasons a company will use your FICO SBSS, this score is most commonly used by major banks to determine your company’s creditworthiness for business lines of credit and terms loans. Lenders use this scoring model because it’s associated with SBA loan standards, so banks will prescreen your application using your FICO SBSS.

Checking Your FICO SBSS Score

Checking your FICO SBSS score isn’t difficult, but your options are limited. You can view your credit score through NAV, an online credit platform. However, you will need to sign up for a monthly subscription service, starting at $49.99 per month.

How to Improve Your FICO SBSS Score

You can improve your FICO SBSS score in a few ways, including making on-time payments, verifying your business credit reports, and building business credit. Improving your business credit takes time, and it may take months or even years to see results, so patience is key. However, it’s an essential part of establishing financial standing as a company.

1. Build Business Credit

Building business credit is one of the best ways to improve your FICO SBSS credit score, although it’s by no means a quick fix. You’ll need to open business credit accounts that report your payment activity to Experian, D&B, and Equifax. Business credit scores are essential when you need resources later.

2. Make Timely Payments

Once you’ve established business credit, it’s important to maintain a good payment history. By making on-time payments to banks, vendors, and suppliers, you’ll improve your business credit and boost your FICO SBSS score. If you want to make an impact, pay before your due date.

3. Verify Your Credit Report

You only have a FICO SBSS score when your company has a credit report with at least one of the three major business credit bureaus—D&B, Experian, and Equifax. If you have inaccurate payment information, it can affect your business credit scores negatively. You can improve your credit score by reviewing your business credit reports and disputing any inaccurate information.

4. Improve Your Personal Credit

Because FICO SBSS score uses your personal score to calculate your business score, improving your personal credit can be a big score booster. How much your personal credit plays a part depends on the bank or lender accessing it. However, if your FICO SBSS score seems lower than expected, and you have a good personal credit score, your business partner’s personal credit may be an issue.

Bottom Line

Your business credit scores are an important indicator of your company’s financial health. Any interested parties in your business, like lenders, creditors, and vendors, will use your credit score to evaluate your creditworthiness. So, it’s not only worth it to build business credit, but it’s also vital to monitor your FICO SBSS score regularly, especially if you plan on applying for a Small Business Administration (SBA) loan.