A business credit score gives a quick summary of the information on your business credit reports. Specifically, a business credit score assesses your company’s ability to make payments on time. The information used to calculate your business credit score includes public and private information which can be seen by your vendors, suppliers, lenders, and more.
Before we start, if you ‘d like to check your personal credit score for free and get a business credit summary, you can do so with NAV. They also offer access to credit reports, scores, monitoring, and fraud protection for a monthly fee.
Business Credit Score
A business credit score is an important measure of a company’s financial health. However, few business owners know that there are actually 4 main business credit scores and up to 8+ total scores. To help, we’ve written this ultimate guide on business credit scores, including what they are, why they’re important, and how to build them
Business credit scores often range from 0 – 100. The higher the score the better the credit and the lower the likelihood of a late or delinquent payment. Below are the four business credit bureaus and their most common credit score:
- Dun & Bradstreet: PAYDEX Score: 0 – 100 (Good Score is 80+)
- Experian: Credit Ranking Intelliscore: 0 – 100 (Good Score is 76+)
- Equifax: Business Payment Index: 0 – 100 (Good Score is 90+)
- FICO SBSS: LiquidCredit Small Business Scoring Service: 0 – 300 (Good Score is 140+)
All credit bureaus typically use public data, information reported by vendors and lenders, as well as self-reported information to generate your business credit score. While self-reporting proprietary information isn’t required, accurate and up-to-date data can help your business credit score. We discuss each of your business credit scores in the sections below.
For more information on how to establish business credit, read our section on establishing business credit. For more information on how to build your existing credit score, jump down to our section on building business credit.
How Business Credit Scores Work: Dun & Bradstreet vs. Experian vs. Equifax vs. FICO SBSS
Unlike personal credit, your business has 4 major business credit scores and up to 8+ total business credit scores.
8 Common Business Credit Scores
Commercial Credit Score (101 - 670),
Financial Stress Score
(1,001 - 1,875)
(0 - 100)
(0 - 100)
Business Credit Risk Score (101 - 992),
Business Failure Score (1,000 - 1,880)
(0 - 300)
Dun & Bradstreet Business Credit Score
Dun & Bradstreet (D&B) is the most commonly used business credit score. D&B collects public business and industry information, payment history, and financial performance information to generate 3 individual business credit scores. These 3 scores measure a company’s ability to pay its past and future debts as well as measure its overall financial solvency.
Dun & Bradstreet business credit report, also known as the D&B credit report, is thought of as the “800-pound gorilla” in the area of trade credit and government contracting. Let’s take a minute to explore each of D&B’s 3 business credit scores in more depth.
PAYDEX Business Credit Score
The PAYDEX Score is a business credit score that analyzes a company’s payment performance over the most recent 12 months. The score ranges from 0 – 100 and a score of 100 signifies a perfect payment history on behalf of the company. A “good” PAYDEX score is usually 80 or above.
According to Dun & Bradstreet, a PAYDEX Score is used like a person’s FICO score for business. For example, it helps lenders, vendors, and other suppliers determine the type of financing terms to extend. The higher the score the more favorable terms you can get.
Typical PAYDEX score ranking is a dollar-weighted average over a 12-month rolling period:
- Good PAYDEX Score: 80 – 100, Payments are made on-time or 30 days early
- Fair PAYDEX Score: 50 – 79, Payments are made 15 – 30 days late
- Bad PAYDEX Score: 0 – 49, Payments are made 31 – 90+ days late
Each vendor or creditor is considered a “single payment experience.” Dun & Bradstreet will analyze the timing of each payment experience the terms of the sale for that experience.
Late payments are first reported by vendors, lenders, and suppliers to collection agencies who then report to Dun & Bradstreet. Early or on-time payments are self-reported by vendors, lenders, and suppliers directly to Dun & Bradstreet. You can ask your vendors to report good payments or you can work with vendors, like Wal-Mart, who do it automatically.
Commercial Credit Score
The commercial credit score predicts the likelihood that a business will become delinquent on its bills. Included in this delinquency could be the need to get legal relief from creditors or ceasing operations without paying creditors within the next 12 months. According to Dun & Bradstreet, a company that makes 10% of its payments 91 days overdue, on average, is considered to be delinquent.
The Commercial Credit Score is actually broken down into three individual scores:
- Commercial Credit Score (101 – 670): Measures the probability of delinquency, with 101 being the most probable. A score around 500 is considered to be good.
- Commercial Credit Percentile (0 – 100): Measures the probability of delinquency against other companies within the Dun & Bradstreet database, with 1 being the highest probability of comparative delinquency. 80 is considered to be a good score.
- Commercial Credit Class (1 – 5): Segments the companies within the Dun & Bradstreet into 5 distinct classes, with 1 representing the lowest probability of delinquency and 5 representing the highest. A score of a 2 is considered good.
These business credit scores are calculated using payment information provided by vendors, lenders, and suppliers, public filing information, and self-reported financial data. The scores use Dun & Bradstreet’s proprietary predictive modeling analysis to generate the results.
Financial Stress Score
The financial stress score is used to measure the likelihood of business failure over the next 12 months. Dun & Bradstreet defines a “financially distressed company” as one that ceased operations following a bankruptcy or with loss to creditors, voluntarily withdrew from business operation leaving unpaid obligations, or has made another arrangement for the benefit of creditors.
The financial stress score is broken down into three individual scores:
- Financial Stress Score (1,001 – 1,875): Measures the probability that a company will face financial distress over the next 12 months, with 1,001 being the most likely. A good score is typically around 1,288.
- Financial Stress Percentile (0 – 100): Like consumer credit, the Financial Stress Percentile measures the likelihood of a company’s financial distress in relation to the existing companies in Dun & Bradstreet’s database. A good score is around 80.
- Financial Stress Class (1 – 5): Segments a company into one of 5 risk classes based on its chances of financial distress, with 1 being the lowest risk and 5 being the highest. A 2 is considered to be a good score.
These scores are calculated using information found in the Dun & Bradstreet database, including financials, comparative financial ratios, payment trends, public filings, demographic data and more. For more information on your D&B business credit scores, you can read our article on the D&B credit report.
Experian Business Credit Score
The Experian business credit score is most commonly used by banks and lenders. The Experian Credit Ranking Intelliscore uses more than 800 variables in order to assess the risk that a company will default or become delinquent on its payments. The typical good score for the Experian Credit Ranking Intelliscore is 76 or higher.
The Experian Credit Ranking Intelliscore typically has the following score range:
- 76 – 100: Low risk of late payments or default
- 51 – 75: Low to medium risk of late payments or default
- 26 – 50: Medium risk of late payments or default
- 11 – 25: Medium to high risk of late payments or default
- 1 – 10: High risk of late payments or default
Specifically, the Experian Credit Ranking Intelliscore gives insights into a company’s payment trends, public record filings, collections, and general business background. The result is a blended score calculated using both the business’s and business owner’s information.
Unlike Equifax and Dun & Bradstreet, Experian doesn’t ask for self-reported information. Instead, they collect all the information themselves.
Equifax Business Credit Score
Equifax is similar to Experian in that it’s typically used by banks and lenders when assessing borrower qualifications. However, unlike Experian, Equifax’s business credit score is broken out into 3 individual scores. These scores take into account public business and industry information, payment history, and financial performance information.
The 3 Equifax business credit scores are as follows:
- Business Payment Index (0 – 100): Measures payment history to past creditors over the past 12 months, with 100 representing early or on-time payments. A score of 90+ is considered to be a good score.
- Business Credit Risk Score (101 – 992): Evaluates the likelihood that a company will become severely delinquent on its future payments, with 101 being the most likely. A score of 700 is a good business credit risk score.
- Business Failure Score (1,000 – 1880): Measures the likelihood that a company will become insolvent over the next 12 months, with 1,000 being the most likely. A score of 1,315 is typically considered a good business failure score.
Equifax uses such information as credit utilization, past delinquencies, length of credit history, payment history, public information, and past financial performance to calculate these numbers.
FICO SBSS Business Credit Score
FICO is unique in that it isn’t technically one of the 3 major credit bureaus. Instead, FICO provides a business credit report based on information already gathered by Dun & Bradstreet, Equifax, and Experian. The business credit score is known as the LiquidCredit Small Business Scoring Service (SBSS) and it’s most commonly used to approve SBA loans.
The FICO SBSS business credit score ranges from 0 – 300. If you want to be approved for an SBA loan or something similar, the number you need to exceed is 140. However, since FICO doesn’t collect its own information, the way you can establish and build your business credit score is by focusing on the 3 major credit bureaus and their scores.
How to Establish Business Credit
Establishing your business credit is important for new businesses and companies that don’t already have a credit score. Establishing business credit is the act of generating a business credit report for your company. Each credit bureau has its own procedures for establishing business credit.
Let’s take a look at how to establish your business credit with each of these bureaus.
Dun & Bradstreet
There’s a two-part process for establishing credit with D&B:
- Get a D-U-N-S (Data Universal Numbering System) number – This is a unique 9-digit identification number similar to a social security number and is used to create your business credit file. You can apply for a D-U-N-S number for free on D&B’s website or through a credit monitoring platform such as Nav.
- Provide at least 3 trade references – Trade references, similar to employment references, come from suppliers and creditors that you’ve done business with. These trade references are usually based on a history of early or on-time payment.
You can get trade references by asking vendors with whom you have a positive relationship to report your payment activity to D&B. These are some of the easiest trade references to have reported:
- Home Depot
Alternatively, if you pay $99 per month for D&B’s CreditBuilder Plus service, D&B will contact vendors for you to verify that you are a customer and have been paying on time.
It’s also possible that you already have a D-U-N-S number and a business credit score. This is the case if a vendor or creditor reports a late or delinquent payment to Dun & Bradstreet. You can check to see if you already have a D-U-N-S number by visiting their website and searching for your company.
If you already have a D-U-N-S number you’ll want to make sure that you check the accuracy of the information on your D&B credit report. This gives you the opportunity to add or update information as needed. Remember that up-to-date information can help your business credit score.
Equifax & Experian
You don’t need to create an account or get trade references with Equifax or Experian. These bureaus automatically look at Secretary of State records, collections records, and other public records for new business filings. They can score your business solely based on demographic information.
However, Equifax allows for business owners to self-report company information. This isn’t required, but like Dun & Bradstreet, up-to-date and accurate information can benefit your Equifax business credit score. You can check and update your information by visiting the Equifax website.
Experian is the only credit bureau that doesn’t ask for self-reported information. You can check on your business credit score by visiting their website.
Unlike the three credit bureaus, FICO just provides you with a business credit score and not a business credit report. Specifically, FICO gets its information from the 3 major credit bureaus and you don’t need to create an account. You can check your SBSS business credit score through Nav.
All business credit scores can be ordered directly from the agency or through Nav. We recommend Nav because the company allows you to keep tabs on your score over time and they will even help you analyze your score.
Unlike consumer credit reports – which you are entitled to receive for free annually – you have to pay for business credit reports. Depending on the comprehensiveness of the report and the reporting bureau that you use, this costs anywhere from $30-150 per report. By comparison, NAV lets you check your business credit scores for a monthly recurring cost of $49.99
How to Improve or Build Business Credit
Building your business credit is an important step for established companies that already have a business credit report. Building business credit is the act of bettering the information used to calculate your business credit score.
There are 6 specific ways in which you can build your business credit.
- Separate business and personal finances
- Get a business credit card, line of credit, or lease
- Choose vendors and lenders who will report good payments
- Pay your bills on time or early
- Keep credit utilization ratio below 33%
- Regularly check your business credit report and correct any errors
Let’s take a moment to look at each of these steps in more depth.
1. Separate Business and Personal Finances
Separating your business and personal finances is key to maximizing your business credit. How you handle your personal affairs should not impact your business credit, so don’t commingle them.
To separate your finances, you’ll want to open both a personal bank account as well as a business bank account. Chase Bank, for example, has a business checking account that offers a wealth of flexibility for you the business owner.
Alternatively, for other business checking accounts, you can check out our articles on the best small business checking accounts. And for the best business savings accounts, you can read our article on the best small business savings accounts.
2. Get a Business Credit Card, Line of Credit, or Lease
The best way to build business credit, like personal credit, is to borrow money and pay it back in a timely manner. For example, getting a small business credit card and paying the balance every month is a good first step towards building a history of prompt payments.
As an added bonus, you can even earn cash back and rewards points if you choose the right business credit card. For more information on the right credit card for your small business, check out our full review of the Best Small Business Credit Cards.
If you can’t qualify for a standard credit card, try getting a card through Staples, Home Depot, Walmart, or other retailers that you buy from. These are relatively easy to qualify for and make good trade references for your business credit report. If your personal credit score is below 620 you may do better with a secured business credit card.
3. Choose Your Vendors and Lenders Wisely
A great way to build your business credit score is to have your vendors, suppliers, and lenders report good payments. However, many of these organizations fail to do so. According to the U.S. Small Business Administration, less than 6,000 out of the more than 500,000 suppliers in the US report to business credit agencies.
If you have a positive payment history, ask your current suppliers and creditors if they report to the business credit agencies. If they don’t, ask them if they can start reporting. Many vendors will agree because there’s no cost to report to the credit bureaus.
If possible, going forward, choose creditors and suppliers that automatically report to at least one major business credit bureau. Some easy credit lines to have reported are Quill, Uline, UPS, Staples, Lowes, and Home Depot.
4. Pay Your Bills On Time Or In Advance
This seems like a no-brainer, but to get your business credit as high as it can be, you have to pay every one of your suppliers and lenders on time. The bulk of your business credit rating depends on how timely you pay your business partners, suppliers, vendors, and lenders.
If you look at the breakdown of the business credit scores again, it pays to be early on your payments. If you can average 30 days early you can receive the highest business credit score. Vendors can even leave comments on your business credit report, such as “Prompt, pays early, pays slow, account sent to collections etc.”
5. Don’t Use Too Much Credit
The lower your company’s credit utilization ratio the better it reflects on your score. For example, if you have a $100,000 business line of credit but only use a quarter of that, your credit utilization ratio is low at 25%. A high credit utilization ratio is anything above 33%.
This shows creditors that your business is doing well enough financially that you don’t have to max out your credit line or have enough credit to draw on in the event of financial distress.
6. Fix Errors On Your Business Credit Report
Unlike personal credit, there isn’t a standard process for disputing errors on your business credit report. In fact, each bureau has its own procedures.
For example, you can submit disputes electronically to D&B and Experian. To disputes items on an Equifax report, log into your account and contact customer service. Fixing an error on your business credit report, assuming that you have documentation to support your claim, usually takes about 1 month.
Get a Free Business Credit Score
Unfortunately, business credit scores aren’t really free. Instead, credit bureaus often package a “free” business credit score as part of a larger package that you can purchase. However, you can get a free personal score and a summary of your business credit reports through Nav.
Nav offers free access to your personal credit score and also provides you with two free summaries of your business credit score. If you want to purchase a full business credit report, you can sign up for a monthly subscription at $29.99.
The 3 credit reporting bureaus also offer free company searches on their website. This helps you verify whether or not you already have a business credit score. Dun & Bradstreet, for example, might not have a business credit score on your company. You can check by navigating to their website and running a company search.
You can use this same process to check and see if any of your suppliers, customers, vendors, or third-party members have a business credit score of their own. However, if you want to access the full credit score and report, you’ll most likely have to pay for it. You can read more about business credit reports and where to find them in our article on business credit reports.
Business Credit Score Importance
Your business credit score is important because it’s used by vendors, creditors, lenders, and other partners to assess the creditworthiness of your company. For example, a company with a high credit score can negotiate favorable terms with vendors or lenders while a company with a low credit score might receive unfavorable terms.
I talked with Andrea Roebker, Regional Communications Director for the U.S. Small Business Administration, who spoke about the importance of a business credit score:
“Building your business credit up from the beginning sets a solid foundation for your company’s image, protects your personal credit, limits your liability and increases your credit capacity. Overall, business credit is similar to your own personal credit score and reveals a business’ ability to repay its debts.
Good business credit can ensure that small businesses get financing when they need it and under the best possible terms. Essentially, it is the lifeline of your business and serves to determine its financial reputation.
A good credit score allows you to expand, cover day-to-day expenses, purchase inventory, hire staff and more. It can help with securing a business credit card, opening a merchant account, lower insurance premiums, renting commercial property and leasing or buying business vehicles.”
These reasons and more make your business credit score extremely important. Further, anyone can pay to see your business credit score, and you probably have one already even if you haven’t submitted any information yourself.
This makes it beneficial to understand your business credit report, including how to establish business credit as well as how to build your business credit.
Differences Between Your Personal & Business Credit Score
The differences between your business credit score and your personal credit score include:
- Business credit takes into account private and public company data
- Business credit typically doesn’t take into account personal information
- Business credit can be pulled by anyone without your permission
- There are 4 main business credit scores and up to 8 total scores
However, your business credit can sometimes take into account personal financial information if you haven’t separated your personal and business finances with a business bank account. Further, your personal credit score will also typically be used alongside your business credit score when applying for a small business loan.
I caught up with Levi King, the co-founder and CEO of Nav, who also told us that:
“There is also a difference when it come to disputes. Unlike a consumer credit report, the burden of proof for correcting any mistakes on a business credit score lies with the business. The FCRA does not extend its protections to business owners related to their business credit.”
A business credit score is used to assess the creditworthiness of a company. Business credit scores typically measure the chance that a company will meet its future payment obligations. A business credit score takes into account both public as well as private information when making its measurements.
NAV is an online company that helps business owners manage their business credit with instant access to business and personal credit reports. They offer 2 free summaries of your business reports and also offer full business credit reports starting at $29.99.