How to Check Your Business Credit Score Report
Any business owner can tell you that running a business requires credit. However, to get the best deals on business credit and loan offers, your business needs to have an excellent credit score.
Surprisingly, there are many business owners and operators that don’t know how business credit scores work. This article will change that. We’ll cover everything you need to know about how business scores are created. We’ll go over the differences between business and personal credit scores. Then we’ll talk about places you can get credit reports for businesses. Finally, we’ve got a section on how to build business credit. This is a must-read for any new small business owner.
Use the information in this guide to ensure your business has the credit history it needs to grow. Credit and loan offers can make the difference between growing a business or shutting it down. That means understanding business credit scores as essential to your livelihood and that of your employees.
Best Places to Check Your Business Credit Report
The Different Business Credit Scores & Reporting Bureaus
There are actually several different models used to for business credit scores and reporting. We’ll cover the three biggest ones, PAYDEX, Intelliscore, and LiquidCredit.
PAYDEX by Dun & Bradstreet
D&B use the PAXDEX system for generating a credit score for a business. The credit score ranges from 1 to 100. The higher the score, the better it is for the business. This scoring model is fairly specific in what the score means.
A score of 80-100 means that the business is at a low risk for late payment. D&B defines this as averaging payment immediately to 30 days within the payment terms.
A score of 50-79 means that the business has a medium risk of late payment. That means that the business averages 30 days or less beyond the payment terms.
A score of 0-40 means a high risk of late payment. A business gets this score range when they average 30 to 120 days beyond payment terms.
The system breaks things down even more specifically. Every 10 points on the score range represents a distinct category of classification. This chart explains what each 10-point increment means:
Payment 30 days earlier than terms
Payment 20 days earlier than terms
Payment on terms
Payment 15 days past terms
Payment 22 days past terms
Payment 30 days past terms
Payment 60 days past terms
Payment 90 days past terms
Payment 120 days past terms
1 – 19
Payment over 120 days past terms
As you can see, this level of detail provides a very specific analysis of a business’s payment history. As a result, vendors, lenders, and creditors can get an accurate understanding of the risks they take when they extend credit to a business. They can use this information to set interest rates and expectations on repayment.
Intelliscore PlusSM from Experian
The Intelliscore Plus model is used by Experian. It is a statistically based score that predicts the chance of a serious delinquency within the next 12 months. The model combines business and proprietor credit data. It also looks at over 800 commercial and owner variables to generate the score. These variables include credit inquires, public filings, new account activity, financial ratios, tradeline and collection information, and more.
Intelliscore generates a score from 1 to 100. The higher the number, the less risk the business represents. It further divides the scoring into 5 risk classes.
Scores 100 – 76 represent risk class 1. This classification represents the lowest risk class.
Scores 51 – 75 represent risk class 2. This classification represents low to medium risk.
Scores 26 – 50 represent risk class 3. This classification represents a medium risk.
Scores 11 – 25 represent risk class 4. This classification represents a high to medium risk.
Scores 1 – 10 represent risk class 5. This classification represents a high risk of default.
This model doesn’t have the same level of detailed breakdown you find in the Dun & Bradstreet PAYDEX model. But it still offers a comprehensive understanding of the business. Vendors can use this scoring system to determine what kind of terms to offer a business.
FICO LiquidCredit Small Business Scoring Service
The FICO LiquidCredit Small Business Scoring Service is the model that’s used for Small Business Administration loans from the government. The score range goes from 0 to 300. The higher the score, the less risk the business represents.
FICO says that the score is generated on the basis of business credit history, timely payments to vendors, and a personal credit history. A business needs a score of at least 140 to pass the SBA’s pre-screen process.
Business Credit Score Factors
Much of the process of calculating a business credit score is similar to what you find with a personal credit score. However, businesses have more complex financial situations than individuals, so there are some key differences. We’ll cover the different factors that go into a business credit score below.
Credit Utilization Ratio
This factor works just like it does for a personal credit score. The scoring agency looks at how much total available credit a business has and how much it’s using. The lower the credit utilization, the better the score.
This also works just like it does on personal credit scores. The scoring agency looks at the history of on-time payments. It’s important to watch this factor for errors. That’s because businesses have different financial arrangements than people do. For example, you might have 60 days to pay a bill from a vendor because they’ve offered you net 60 terms. A mistake could record the payment as late if the terms are recorded as net 30.
Length of Credit History
This factor is also similar to what you find in personal credit reports. A longer credit history gives lenders and creditors more information about how you handle loans and credit. The longer a businesses credit history, the better the score.
This is one area where business credit scores differ from personal credit scores. While personal credit histories record debts, they don’t factor the amount of installment debt into a credit score. Instead, personal credit histories only worry about payment history.
Businesses are different. Outstanding debt is factored into a business’s credit score. Lower outstanding debt translates into a higher credit score.
Public records include tax liens, judgements, settlements, and similar information. This factor is very similar to personal credit scores.
The size of a company also plays into its credit score. This is different than personal credit histories. After all, there’s no way to measure someone’s “size” in financial terms. Larger companies have better credit scores. It takes time to grow a company. A larger company demonstrates competent management and also means they have a good revenue stream.
This factor is also different than you get with personal credit histories. The type of business a company does helps determine its credit score. That’s because some businesses are inherently riskier. That might be because the business industry has a statistically greater chance of non-payment, or because the industry has additional legal and regulatory obligations that make it higher risk for lenders.
Understanding the Ways Business Credit Scores are Used
Generally, most business owners understand that their business’s credit score affects their access to loans and lines of credit. However, businesses have more complex financial dealings, so it’s important to understand what that means.
First, your business’s credit score affects your borrowing power. This is simple and straightforward. It refers to the ability of getting a small business loan and lines of credit from financial institutions. The better your score, the more credit you can access. Additionally, a better score means that you can get better terms on these products.
Second, your business’s credit score influences the rates you get on business insurance. Every business needs general liability insurance at the very least. Insurance companies use a company’s credit score to help set the rates that it offers on its products. That’s because the insurance company wants to make sure it gets paid for its product. The lower your business’s score, the higher the rates you’ll be charged for business insurance.
Finally, a business’s credit score is used by vendors and suppliers. Many business owners don’t realize that the deals they make with suppliers and vendors are actually a form of credit. This has the biggest impact when it comes to the repayment terms you’re offered. Repayment terms take the form of net terms. For example, Net 60 means that you have 60 days to provide payment. The longer the terms you get with your suppliers, the more control you have over cash-flow fluctuations. A higher credit score can get your business more favorable terms.
Places You Can Get Credit Reports for Businesses
Now that you understand what goes into a business credit score and the different ways that business credit scores are generated, you might be wondering what your business’s credit score is.
It may surprise some people to find out that it’s actually much harder to get a business credit score report than it is to get your personal credit score.
That’s because federal and state governments have laws that regulate access to personal credit scores. These laws are designed to make it easy for consumers to see if there are any errors on their report. It also lets them understand their credit score so that they can plan their finances. As a result, there are a ton of ways individuals can access their credit report for free.
However, businesses don’t get the same protections as individuals. Therefore, it can be hard to find a place to get a free credit report on your business. You can pay for business credit reports from different sources. That’s because these credit reports are a business expense and a business investment. That means they’re different than individual credit reports.
However, we did manage to find some places that you can get a free credit report for your business. We’ll cover those now.
CreditSignal Business Credit Reports
This service is offered by Dun & Bradstreet, the same company that manages the PAYDEX business credit scoring system.
In order to access your credit report, you’ll need to sign up for a free account. The account comes with lots of great perks. It comes with an online dashboard and has a mobile app. You can get score change reports, so you know whenever your score changes. You can also request email alerts when your score changes.
In addition to credit score reports, the service offers a lot of great tools and information. One of the best features is an online business credit education center. This resource gives you lots of helpful information about business credit that’s specific to your industry. Additionally, this tool will help you understand how you can improve your business credit. It does this by offering personalized information and tips based on your profile.
However, this service isn’t perfect. The free version of the service only tells you when your score changes. It doesn’t give you your actual score or rating. If you want that level of detail then you’ll need to pay a subscription fee to get full access to D&B’s business credit reporting service.
Credit.net Business Credit Reports
Credit.net offers a free 7-day trial that you can use to get your business credit report. After the free trial is up you’ll have to pay for the service. However, the nice thing is that you don’t need a credit card to start the trial. That means you can do the trial, get your information, and then make a decision. You don’t need to worry about remembering to cancel the subscription or any automatic charges.
CreditSafe.com Business Credit Reports
This service is very similar to credit.net’s service. You can pay for a subscription to get full access to business credit reports, but you can get a free report to test out the system.
CreditSafe.com also has a lot of credit monitoring tools. They give you your risk rating, payment trends, any synced financial data, and more. The service itself has three different levels you can purchase, standard, plus, and premier. The prices on the services change depending on your business. However, you can talk to a risk consultant at the company to get a quote for your business.
Nav functions a lot like the CreditSignal service. You can get a free account. You don’t even need to provide a credit card. However, the free account just gives you summaries of your business credit report. You’ll need to pay a subscription fee to get the full report.
There is one key way that Nav is different though. They offer report summaries for D&B and for Experian. That sets them apart from some of the other services on this list, which only work with one or the other. As a result, you can get a great comprehensive picture of your business’s credit. That means you’ll know where you stand no matter what service your vendors, suppliers, creditors, or lenders use.
Scorely is a business credit reporting agency. They take data from lots of different sources and compile it into easy-to-understand reports. Much like the other entries on this list, you can get a free business credit report demo at first. If you like the service, then you can pay for a subscription.
SBA Loan Credit Report
Finally, you can also get a business credit report if you apply for an SBA loan and are denied. Once you’ve been denied for an SBA loan, the credit agency your lender contacted will send you a letter explaining the details. You then have 90 days to request, in writing, a copy of your business credit report.
This report is free. However, it doesn’t have a detailed rundown of your score. Also, you only get information from the credit reporting agency that your lender talked to. That means you only get access to a single score. Therefore, it’s not ideal, but it’s still useful information if you want to understand why you didn’t qualify for an SBA loan.
How to Build Business Credit
Now you understand the different types of business credit score and how to access your business credit report. The next step is building your business’s credit. This is an extremely important operation for any business.
Access to credit and loans can dramatically alter your business’s growth. Good credit can let you get equipment and resources to expand sooner. It can also let you take advantage of an unforeseen business opportunity.
However, there’s another reason to build your business’s credit. It lets you separate your personal finances from the business’s finances.
Most lenders require a personal guarantee when they extend a loan or business line of credit to a young business. A personal guarantee means that you’re on the hook for the debt if the business can’t pay it back. As a result, the lender can seize your personal assets, including your house, car, savings, stocks, and anything else of value to recoup your business debt.
Therefore, establishing business credit is a great way to shield yourself from personal liability for any business risks. Let’s face it, any business carries some amount of risk. You want to protect yourself and your assets in case the worst happens. There are a few simple steps you can go through to establish good credit for your business.
Establish Your Business as a Business
The first step is to establish that your business is, in fact, a business. This creates a separate legal entity for your business. That entity is distinct from you as an individual. There are a few things you need to do in order to complete this step in the most effective way possible.
First, incorporate your business as an LLC. This is the first and most important step to establishing that your business and your personal assets are different. You can create an LLC online or by filing the proper forms and fees with your state’s department of commerce.
Next, you need to request a federal employer identification number. This is also known as an EIN. The IRS will provide you with one free of charge. This will make payroll tax information easier and further serves to identify your business as its own entity.
The third step is to open a business bank account. You want to use your business’s legal name when you’re doing so. This will help you separate your personal and business finances. It will also help you start a payment history with business credit reporting services.
You’ll also want to have a dedicated business telephone number. When you get a phone number, be sure that the account is under your business’s legal name. This will also help you establish payment history so you can start building credit. It also shows that your business is separate from you as an individual.
Finally, you’ll want to register with Dun & Bradstreet to get a D-U-N-S Number. It’s free to register your business. You’ll want to get a separate number for each of your business’s physical locations. You need this number to register for contracts or grants from the federal government.
These steps give business credit reporting agencies everything they need to start tracking your company’s credit history, and thus, generate a business credit score for your company. The EIN or D-U-N-S Number allows them to track when payments are reported.
Apply for a Business Credit Card
The next step to building a business credit history is very similar to what you would do to build a personal credit history. You should apply for the best business credit cards. This gives you an account that will report your payment history to the credit monitoring agencies.
You may have some payment history depending on your vendors and suppliers. These businesses may or may not report your payments and transactions to the business credit reporting agencies. If they do, then you’ll already have some business credit history. However, there’s no rule or regulation that mandates vendors and suppliers report this information.
Getting a business credit card also opens up the potential to save money and get helpful perks. Most credit card companies offer better rewards programs for businesses than they do for individual cardholders. That means your business card can help you generate rewards you can invest back into your business.
Determine if Your Vendors Report
The next thing you should do is see if your vendors report payment history and transactions. If they don’t, you might want to request that they start. If they refuse, then you may want to look for new vendors and suppliers. You can find vendors and suppliers that report and open an account with them. You can do this even if you don’t use them as your primary vendors or suppliers, just as long as you make consistent purchases and payments.
Pay Early, Pay Often
Once you have vendors and suppliers that report to credit monitoring agencies, you need to pay them early. Paying ahead of your terms will ensure that you get a higher business credit score. This makes a lot of sense if you think about what the PAYDEX and Intelliscore Plus measure. These scores measure how likely it is that you’ll pay a bill before or when it’s due. That means paying immediately when you have 30 days to pay will help your score go up.
This is also true because those business credit score services look at the average of your payments. That means it’s ok to wait a few days if you have to. You can even wait until the bill is due. But paying early often will cause your score to grow much faster than waiting until the last minute to post your payment.
Remember, You’re Never Done Building Credit
These are the basic steps you’ll need to do to build credit for your business. However, it’s important to keep in mind that you’re never really done building your business credit score. It’s also important to remember that your business credit score is vulnerable to the same things as a personal credit score.
That’s why you should actively monitor your business’s credit score. Monitoring your score will help you ensure that mistakes or errors don’t cost you valuable points. It will also protect you from employee misuse of credit cards or your business having its identity stolen and misused.
A good credit score provides lots of benefits to your business. Don’t miss out on opportunities or slow your business’s growth because you don’t have the score you need to access loans and lines of credit. Take advantage of all of the financial products on offer for businesses by growing your business credit score today!
Building business credit is quite a daunting task for entrepreneurs who are not familiar with this very important concept. That is why we created this guide to give you an idea of the steps necessary to make this an organized process, and to ensure that you'll be able to use business credit to your advantage instead of a hindrance to your business.
Establishing a Business
Before worrying about credit scores or business credit, you need to have a business first. While this might seem like a simple and straightforward task, a lot of first-time entrepreneurs seek to know the basics of how to setup a business. Here are some basic tips to get you started.
How can I establish a business?
It depends on the type of business, but all businesses must be registered with the government, have the necessary documentation, have a core team of employees, and a work address (which can now be virtual.)
Do you need good credit to start a business?
Preferred, but not required. A good credit line gives you the financial buffer in case things go south, but it is not required by the government upon registration. Take a look at start up unsecured business loans.
How do you build a business?
A business starts from having a good idea. But planning how you are going to sell that idea to your customers, growing a team of employees, and having a financial plan is necessary for a business to be successful.
How do I incorporate my business?
First, determine the type of business structure you want, whether it's going to be a sole proprietorship, a corporation, or others. Then, obtain all the necessary documents for that type of business ownership.
Is an LLC good for a small business?
Yes. Establishing a business as an LLC is not dependent on credit scores. In fact, it is encouraged as it frees the owner from personal liability in case the business fails.
Can you start an LLC with bad credit?
Yes. Start by obtaining basic business requirements. Having a federal employer identification number, business bank account, business number, and registering your business as an LLC gives you the best chance of securing a business credit. Also there are business loans for bad credit.
Understanding Business Credit
Having a good business credit can be a lifeline for businesses and could even be a determining factor for the success of your business. But what it is and how do we obtain it? Read on to find out.
How can a small business build credit?
Good credit can be built by having a good credit history. Paying off small loans on time every time will give creditors the confidence to give you bigger and bigger credit.
How do I build credit for my small business?
Obtaining good credit is like selling – you need to convince creditors that you are trustworthy and a good payor. Paying off loans on time each time will give you the leverage to ask for more.
How do you get listed with business credit bureaus?
You can register directly on websites of credit bureaus such as Experian or Equifax. They usually require business information like Employer Identification Number or Federal Employer Identification Numbers and a fee.
How do you obtain business credit?
Obtaining business credit is a lot like applying for personal loan, only you are applying it for your business. Approval depends on how the credit company or bank assess your business and its credit history.
How can I check my business credit?
After registering in credit bureaus such as Dun & Bradstreet or Experian, you can readily check your credit report history for free on their respective websites.
How can I build my business credit fast?
Obtain basic business requirements. Having a federal employer identification number, business bank account, business number, and registering your business as an LLC gives you the best chance of securing a business credit.
What is the business credit?
It is a type of loan for businesses. It is a lot like a personal loan, except that the one applying for a loan is a company and not and individual. Business loans usually have lower interest rates and longer terms.
How do I apply for business credit without personal credit?
By filling out all the requirements for a business credit. Your personal credit history may affect the approval of your business loan, but it is not usually a requirement upon application. Lean more about how to apply for a small business loan.
Is business credit and personal credit the same?
No. Business credit is for duly registered business and usually have very different payment terms than that of personal credit.
What is the best credit card for business?
It really depends. But generally, the one with the lowest interest rates are best for businesses. But some have extra services like delayed charging or promos for employees that businesses might consider.
Can I get a business loan with bad personal credit?
Yes, especially if your business is established as an LLC. A business should be a separate entity from its owner, and thus, their credit histories are also independent of one another in an LLC setup. You can also apply for small business grants.
What is a business credit file?
It is simply a record of a business' credit and payment history.
Can I get a business credit card with bad credit?
Yes, but if the business already has bad credit, the chances of getting more credit is reduced considerably. There are a number of ways, though, to improve the business' credit score.
Credit Score Basics
In order to categorize which business is credit worthy or not, credit scores are assigned by agencies to each company. Read on below to find out their meaning, how they are obtained, and how they affect your business credit.
What is your business credit score?
You can check your business score on the website of the credit agency you are registered to.
Which business credit cards do not report personal credit?
A lot. Usually, if the company has obtained a business credit card, reporting of the banks is then confined to the credit record of the company, not the owner or any individual.
What is the business credit bureau?
Business credit bureaus are companies that determine the credit worthiness of companies. They do this by assigning credit scores based on the loan and payment history of businesses.
What is a good business credit score?
Depends. But generally, the higher the score, the better. The biggest credit score models are PAYDEX and Intelliscore (both have score ranges of 0-100) and LiquidCredit (uses ranges of 0- 300.)
How do I find out my business credit score?
This is simply a matter of logging in on the website of the credit bureau you are registered with and looking up your business' score.
What is paydex score for a business?
Paydex is the credit scoring matrix used by Dun & Bradstreet, one of the largest credit bureaus in the world. It ranges from 1-100, with a specific credit description in increments of 10.
What is a good D&B paydex score?
80 and up. PAYDEX classifies this range as businesses with low risk for late payment. 50-79 is classified as medium risk and is still good, but anything lower is bad for businesses.
Can you use Credit Karma for a business?
Yes. Credit Karma is a website where you can check your business credit scores for free.
Can you check your business credit score on Credit Karma?
Yes. Credit Karma gives out businesses' credit scores for free. They earn through affiliate marketing where if you obtain a service through their website, they get a commission from the company you chose.
How do you get a Paydex score?
You need to register with Dun & Bradstreet to get your unique D-U-N-S number, which is where your PAYDEX score gets assigned.
What is a good business credit score?
The general rule is that the higher your credit score, the greater the chance your loan gets approved. But since agencies use different scoring systems, it will depend on which credit agency your business is registered with.
What is Paydex declined?
This means that Dun & Bradstreet has determined that your company is more likely to not be able to pay credit.
How do I build credit with an EIN?
Employer Identification Number (EIN) is usually required upon application of business credit, and thus, is among the first pieces of information necessary to build a good credit.
Can I use my EIN to get a loan?
Yes. The Employer Identification Number (EIN) is almost always among the first requirements of credit agencies and banks when applying for a business line of credit.
How do I check my business credit score for free?
Simple check the website of the credit agency you are registered with. Newer companies like Credit Karma also provide credit scores for free.
How to build business credit score?
There is no secret formula to building a good business credit score. It is really as simple as making sure you pay off your business loans on time over an extended period.
What credit score is needed for a business loan?
Depends on the scoring system used. And while credit scores are a huge factor business loan application approval, some banks consider other factors, such as the owner's personal credit history, in assessing credit worthiness. And remember whenever a lender claims to have startup business loans for bad credit guaranteed, look for more reviews and references.
How to get business credit card off personal credit score?
This will be based on whether your bank reports business credit card on your personal credit report. Most banks don't do this and limit the reporting on the business credit report only, leaving your personal credit score as is.
Where to check business credit score?
Credit scores are usually available on a credit bureau's website.
How is a business credit score determined?
Business credit scores, in the simplest terms, are based on the history of a business in terms of paying off loans on time. The better your business is in paying credit, the higher the credit score.
What can you do with a DUNS number?
DUNS number not only shows a business' credit score on Dun & Bradstreet, but also shows various business data. Thus, it is a required of businesses dealing with the US government, and is often used to enhance a business' credit profile.
Credit Reports: What You Need to Know
Credit scores are of little value if not put in context. Credit reports summarize all the needed credit information about a business, and makes it easier for the owners or other people to gauge the credit status of a business.
What is a business credit report?
A business credit report is the summary of all the credit transactions and payment history of a business.
How to get a business credit report?
When you register your business to a credit reporting agency, it will start tracking your credit history which then becomes the basis of your business credit report.
How to pull a business credit report?
The various credit reporting agencies usually offer giving a full credit report on any company for a fee through their website.
How to read an Equifax business credit report?
An Equifax business credit report contains information such as business size, incorporation dates, and many others. But the most important is the score summary, which has the credit information, payment index, commercial delinquency score, and business failure risk score.
How long does a poor credit report remain on your record?
A bad credit report stays on your record for 7 years. Good reports, on the other hand, are recorded indefinitely.
What is the second largest business credit reporting agency?
Depends on who you ask. The big agencies tend to claim the top spot as theirs, so it's left to your own opinion. But among the biggest are Dun & Bradstreet, Experian, Equifax, and Transunion.
How to report to credit bureaus for small business?
If you want to report good or bad credit to a credit bureau, you first need to be a registered member of that bureau. Then, you furnish a service agreement with the agency and report the positive or negative credit.
Which business credit cards report to Dun and Bradstreet?
With Dun & Bradstreet being among the biggest credit bureaus in the world, there are numerous credit card providers that report to it. But among the big ones are Capital One, American Express, and Citi.
How does my business report a client pay history to credit agencies?
You can report a client business to the agency that you are registered with. The reporting usually has a fee, depending on the agency. You will also need to complete a service agreement with that agency.
William Anderson has been working with small business owners for the past 10 years. He got his start at an investment bank, but felt that he was too detached from where real people were making decisions that affected local economies. As a result, he took his experience and his MBA degree to work helping local small businesses.
Learn More About Specific Loans for Your Business
Unsecured Small Business Loans
Secured Small Business Loans