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The Number 1 Reason Why Business Credit Scores Matter

Updated: Dec 13, 2020

What Is A Business Credit Score?

Public record recency, frequency, and dollar amounts on the information in your personal credit report, a business credit score is calculated based on your business credit report. Business credit scores range from 0 to 100. A higher score represents a lower risk to lenders. Your Experian credit score is calculated by a statistically derived algorithm, designed to determine risk based on multiple factors. The following are factors that contribute to your business credit score:

  • Number of trade experiences

  • Outstanding balances

  • Payment habits

  • Credit utilization

  • Trends over time

  • Public record recency, frequency and dollar amount

  • Demographics such as years on file, SIC codes, and business size

Business credit scores also might include information about the business owners and officers.

How Does My Business Credit Score Affect me?

When you apply for credit in your business name, your business credit score will play a big role in whether you are approved and if you will qualify for the best rates and terms available. If you don’t have a strong credit score, it can be costly to your business. It can also mean having to use your personal credit in order to obtain the business credit you need.

Using your personal credit to sign for an account for your business means putting your personal creditworthiness on the line. If your business were to face financial difficulty and you were unable to meet payment deadlines on your business accounts as a result, your personal credit would be negatively impacted as well.

For these reasons, it’s best to establish a strong credit history in your business’s name so that you can qualify for favorable rates and terms without using your individual credit information.

Check Your Business Report and Business Credit Score Often

If you are a business owner, checking your business credit report and score frequently is key to staying on top of your business accounts and making sure the information reported by lenders and suppliers is accurate. This can be especially important if your business and personal credit are linked.

You can visit Experian's website to order a copy of your business's credit report and credit score. When you request your Experian business credit report, you’ll be able to see everything your suppliers and lenders will see when they check your credit. You’ll also gain insight into what is currently impacting your business score and what changes you can make to improve it going forward.

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