Have you ever wondered what your business credit score looks like? Or if you even have one for that matter? If you find that you’ve been rejected for a business loan or cash advance, then it’s possible that your credit score isn’t up to scratch. The good news is that there are practical steps you can take to increase it so that your business becomes eligible for more funding opportunities. In this article, we look at why your business credit score is important, how you can establish it, and tips for improving one that isn’t as high as you’d like.


Why Is Your Business Credit Score Important?

Your credit score is important because it increases your finance options and makes them cheaper too. Having a good score can make your insurance premiums lower so that your everyday costs are less. It can also increase your chances of getting approved for financial products like business credit cards, small business loans, or lines of credit. You’ll also be able to separate your personal and business credit, so that collateral like your house or car aren’t required as security. For small businesses that are looking to expand in the future, it’s crucial to have a good credit score to access the best funding.


How Can I Establish The Credit Score of My Business?

The first step is to ascertain whether your business has its own credit score. If you’ve been paying for things using a personal credit card, then it’s possible that your business may not have a score yet. In order to check your business credit, you’ll need to contact each business credit reporting agency individually. These include Experian, Equifax, FICO, and Dun & Bradstreet. This information isn’t available through public records so you’ll likely need to pay a small fee for them to supply it (unlike a personal credit report which is free).

If you don’t have a business credit score, then there are some simple steps you can take to establish one. These include:

  • Opening a business bank account
  • Incorporating your business or forming a limited liability company (LLC)
  • Set up a phone number under your business’ legal name
  • Register for a federal employer identification number for free with the IRS

Once you’ve followed these steps, you can apply for a business credit card and really start to build up your credit score. Holding a consumer credit card will only influence your personal credit scores so it’s important to get a business-specific one. Use it to make business purchases every month and then repay them in full. Since credit utilization is a factor in your score, it’s important that you use the card regularly to really benefit from it.


What Is A Good Credit Score For A Business?

There isn’t one universal business credit score that’s deemed as acceptable by lenders. Because all the scoring agencies use different factors and calculations, you’ll need to look at each one individually.

  • Experian – business credit scores can range from 0-100.
  • Equifax – have 3 scores, the payment index (0-100), credit risk score (101-992), and business failures score (1000-1610).
  • FICO – for businesses, a FICO score can range from 0-100.
  • Dun & Bradstreet – risk scores range from 0-100.

Some credit agencies will focus on payment history, whereas others will look at a wider variety of factors such as length of trading. It can therefore be helpful to look at your reports from all the agencies instead of just one, as this will give you a better assessment of your overall creditworthiness.


Can I Improve My Score?

Yes, but it takes time to build up so it’s worth starting as soon as possible. The most fundamental thing you can do is make timely payments. Being late will impact your score and can remain on your credit report for several years. This can hamper your score long-term and make it more difficult to access funding at competitive rates.

If you’re consistently making payments on time, then check whether your vendors are reporting this to the credit agencies. If they aren’t, then it’s worth seeking out vendors who do so that your efforts are rewarded in your credit score. This is a simple way to get extra benefits from the payments you’re already making.

Another thing you can do is pay those vendors early instead of on the due date. Many business owners don’t realize that this will get them even more points. Based on Dun & Bradstreet’s scoring system, you’ll get up to 80 for paying on time but 100 if you pay early. So, making this one change to your payments process may be what boosts your score up into the very highest range.

The bottom line is that your business credit score is crucial if you anticipate needing funding in the future. Getting access to low-interest business loans or lines of credit can dramatically improve your cash flow and improve the profitability of your business. Find out your credit score is the first step – from there you can take steps to improve it if needed. If you’re doing so to increase the likelihood of being accepted for loan applications, then there are other important factors to consider. For more practical ideas, check out our article on how to improve your chance of getting a business loan.


How We Can Help

Strategic Capital offers business loans, merchant cash advances, and invoice factoring services that support organizations across the USA. We don’t require capital which means that your personal and business assets aren’t part of the equation. If you’re in need of short-term financing, then we can help. Whether it’s to pay for emergency repairs or investing in expansion we offer small business loans without the need for collateral. Best of all, you’ll benefit from competitive repayment terms and low interest rates, so you have more money to reinvest in your business.

Upon submitting your application, it’s reviewed by a dedicated Capital Advisor. We generate the best rates and terms at lightning speed through our funding matrix and robust lender network. Yep… it’s that simple. Learn more about our small business loans here.


– Bradley Keys

Checking for pre-approval will not affect your credit score.