What Is A Good Credit Score For Businesses? Expert Guide

Most people know about personal credit scores. Business credit scores? Not so much.

You might think they work the same way. They don’t. Each type uses a different formula based on distinct factors.

Want to build and maintain a good business credit score? You’re in the right place. You’ll learn what counts as a good score, why it matters, and how to improve yours. By the end, you’ll know exactly how to strengthen your business credit profile.

Understanding Business Credit Scores

Your business credit score is more than digits. It’s your company’s credibility in number form.

A strong score opens doors to business lending for growth. You’ll get lower interest rates and better financial terms. Lenders use these scores to gauge your reliability as a borrower.

Small businesses looking to expand and large corporations alike need good credit. Any business working with vendors and suppliers can have a credit score.

How Business Credit Scores Work

Business credit differs from personal credit in key ways. Personal credit ties to your Social Security number. Business credit links to your EIN (Employer Identification Number).

You can get an EIN free of charge. It becomes the foundation of your business credit.

Business credit bureaus calculate your score using specific data. They gather information about your credit lines and payment history. Then they calculate creditworthiness for lenders.

Each bureau uses its own unique formula. Four major bureaus handle business credit reporting:

• Dun & Bradstreet (D&B)
• Experian
• Equifax
• FICO

Banks, fintech companies, vendors, and investors all check these scores. Unlike personal credit, business credit is publicly visible. Anyone can see it.

Want to strengthen your overall financial health? Our partner Kikoff can help you build credit effectively.

What Makes a Good Business Credit Score

Business credit scores rely on five main categories. Here’s the breakdown with percentages:

• Payment history: 35%
• Amounts owed: 30%
• Credit history length: 15%
• New credit: 10%
• Credit mix: 10%

These percentages affect your score positively or negatively. Your management makes the difference.

Note that these are general guidelines. Specific calculations may vary by bureau.

Good Credit Score Ranges by Bureau

Good credit score ranges vary between 0 and 100. Each bureau has different standards. Every agency uses unique algorithms to calculate your score.

We’ll cover four major business credit score types. You’ll see what qualifies as strong for each bureau:

• D&B Paydex Score
• Equifax Credit Score for Businesses
• FICO Small Business Scoring Service (SBSS)
• Experian Intelliscore

Dun & Bradstreet Paydex Score

Dun & Bradstreet ranks as the top business credit agency. Their Paydex scoring model leads the industry.

You need a DUNS number to start. Registration is free on their website. The DUNS number identifies your business and forms your credit foundation.

Vendors and lenders use this number to access information. They report your payment history through it.

D&B Score Breakdown

Dun & Bradstreet Paydex scores range from 0 to 100. A score of 80 or above is excellent. Anything below 50 puts you in danger.

A D&B score of 76 is very good. Here’s how the scoring works:

• Poor (0-49): Extremely late payments (1-3 months overdue)
• Moderate (50-79): Moderately late payments (15-30 days)
• Excellent (80-100): Early or on-time payments

Equifax Business Credit Score

Equifax handles both personal and business credit scoring. They check your status with international clients and suppliers too.

Equifax offers two business credit scores:

• Business Credit Risk Score: Ranges from 101 to 992. Indicates delinquency risk over three months. You need 570 or higher for credibility.
• Business Failure Score: Ranges from 1000 to 1610. Predicts business failure or bankruptcy likelihood over 12 months.

Equifax Score Ranges

Equifax uses strict calculations based on DBT (days beyond term). They consider payment history, trade data, lawsuits, employee count, and industry.

Here are the score classifications:

• Poor: Failure Score 1000-1134, Risk Score 101-397 (1-3 months late)
• Moderate: Failure Score 1135-1468, Risk Score 398-695 (15-30 days late)
• Excellent: Failure Score 1469-1610, Risk Score 696-992 (early/on-time)

FICO Small Business Scoring Service

FICO has handled personal credit scores for decades. For small business loans, they offer SBSS (Small Business Scoring Service).

FICO SBSS combines personal and business credit information. The formula includes liens, years in business, and employee count.

Scores range from 0 to 300. You need 140 to 160 minimum for loan prequalification.

FICO SBSS Score Breakdown

• Poor (0-154): Loan approval failed
• Moderate (155-165): First screening passed
• Excellent (166-300): Loan approval successful

Experian Intelliscore

Experian is widely known for personal credit services. They offer two business scoring models:

• Intelliscore Plus: For sole proprietorships, may include personal credit history
• Intelliscore Plus V2: Based on payment history, liens, delinquencies, trade experiences, and credit utilization

Both models range from 1 to 100. The classifications differ from D&B Paydex.

Experian Score Classifications

• Very Poor (1-10): Extremely late (3 months)
• Poor (11-25): Late payment (after 60 days)
• Moderate (26-50): Moderately late (30-60 days)
• Good (51-75): On-time payment (within 30 days)
• Excellent (76-100): Early payment

Important: About 85% of your Experian score depends on payment history.

Why Good Business Credit Scores Matter

Imagine someone wants to work with your company. But your credit reports aren’t strong. Would you trust a business with bad credit?

That question explains everything. Your company’s credit score impacts its entire future.

Business Expansion Opportunities

Every small business owner dreams of expanding. Personal equity funding lacks sustainability for growth. You need external funding.

Good business credit scores attract lenders. Your scores show how promising your future is. More lenders means more funding options.

Strong scores also protect your personal finances. You won’t need personal credit for business funding.

Improved Financial Health

Maintaining good credit improves overall financial health. Businesses become savvy money managers to achieve high scores.

Understanding liabilities and timelines helps you design credit cycles. You ensure payables and receivables stay on schedule.

Whether you trade medical supplies or motor parts, remember one thing. Good credit is a continuous cycle. The more you invest, the more you gain.

Better Lending Terms

Banks verify your borrowing and repayment history. They ensure you have resources for timely repayments.

Good credit scores secure loans with low interest rates. You get better credit terms from banks. Vendors and suppliers offer more favorable terms too.

Strong credit lowers your operating costs. Lower costs mean increased profitability.

Lower Insurance Costs

Insurance companies seek businesses with good credit records. Strong scores attract feasible rates with excellent perks.

8 Tips for Building Business Credit

Bad credit holds you back. You need to take action now. Here are proven tips to build strong business credit.

1. Pay on Time

Good payment history builds good business credit scores. Unlike consumer scores taking years, business scores improve quickly.

All reporting agencies reward businesses that pay within a month.

2. Establish Multiple Trade Lines

A single trade line can boost your score 40 points. Multiple trade lines with good payment history help even more.

Watch out though. Too many trade lines can hurt your rating. Some bureaus require at least three trade lines.

Many vendors offer supply credit. Take advantage of these opportunities.

3. Get Higher Credit Limits

Credit lines matter as much as trade lines. Get business credit lines with higher limits for transactions.

More transactions increase your credit score. Business credit cards come with unlimited bonuses. You can spend on whatever you need.

4. Keep Utilization Low

Show responsibility by staying under your credit limit. Experts recommend using only 30% of your limit.

Make payments as quickly as possible. Business credit cards require even more caution.

5. Work with Multiple Bureaus

Get reports from at least three major bureaus. Different entities use different bureaus.

Multiple bureau relationships expand your network. You connect with more lenders, vendors, and potential clients.

6. Choose Lenders Who Report

Borrow from lenders that report to credit agencies. Reporting lenders help build your score faster.

Small business owners especially benefit from this strategy. Online small business lenders often report to agencies.

7. Maintain Personal Credit

Personal and business credit usually stay separate. But some small business loan approvals consider personal credit.

FICO SBSS is one example. Keep your personal credit strong too.

8. Monitor Your Scores Regularly

Regular monitoring keeps your business secure. You avoid identity theft and calculation errors.

Mistakes can lower your deserved score. Catch them early.

Build Your Business Credit Today

Every company needs business credit to flourish. Your business is always growing and always needs fuel.

Business credit funds your growth. Your credit profile depends entirely on your credit scores. All factors are within your control.

Bad credit closes opportunity doors for years. Just like personal credit affects apartment rentals, business credit affects partnerships.

Pay debts before deadlines to make scores soar. Check your scores regularly with major bureaus. Protect your market worth from errors and theft.

Ready to improve your credit score? Our partner Kikoff helps you build credit the smart way.