A business credit score is a numerical assessment of how strong your business is when it comes to the likelihood of paying back borrowed money. Credit bureaus make this assessment, and those most commonly checking this assessment are financial institutions, suppliers, and other key partners. A business credit score has an associated business credit report, which provides key information on your borrowing history and related factors.
There is no ONE business credit score - there are multiple credit bureaus that all publish their own business credit scores based on their internal assessment criteria. These credit bureaus include CreditSafe, Experian, and Dan & Bradstreet. While these business credit scores differ, there are some common factors.
Your business’s payment history - make sure to pay your bills on time! However, more is tracked than simply whether you pay your bills on time. How long it takes for you to make any late payments is also important.
How much access your business has to credit - call your credit card company and ask for a limit increase, and if approved, this should positively affect your score!
How much credit you are currently using - you want to have access to more credit than you are actually using. Using all of the credit that you have access to is a negative factor, even if you are paying your bills on time. Improve this by paying off some of your debt, opening new tradelines, or increasing the limits on tradelines that you already have.
How many tradelines you have open - having multiple tradelines open is great as long as each has a strong payment history. Setting up automatic payments to make sure you don’t miss any payments is a great idea!
As you can see, a lot of what goes into a business credit score is based on your company’s actual history. However, there is also forward-looking analysis, that takes a look at how your company may do in the future, and how this could affect future creditworthiness. This involves combining your company’s historical behavior with projected growth trajectories and macroeconomic and other conditions. This information is then used to make predictions about the likelihood of future payment delays and defaults, as well as the likelihood that your business remains an ongoing concern.
Having a strong business credit score will open many doors for you. It will help you get financing to help you build your business. It will help you get that financing on better terms, i.e., lower interest rates and for longer periods of time, and possibly without having to offer as much security. It will help you negotiate better payment terms with suppliers, and possibly give you access to higher quality suppliers that you would not have access to otherwise.
Unlike personal credit scores, any party can check your business credit score whenever they want, without your explicit permission. As a result, any party wishing to do business with your business may choose to run a business credit check, so it’s important to have as strong of a business credit score as possible.
Are you shouting, “How do I check my credit score?” You can get a free copy of your business credit report from CreditPush. We can also help you boost business credit scores.
1- Check it for inaccuracies. You can report any inaccuracies to the credit bureau, and they have processes in place for resolving them. Sometimes these inaccuracies can make a big difference.
2- Set up automatic payments to help you pay all of your bills on time. An on-time payment history is critical.
3- Get a new tradeline (make sure it is one that reports to credit bureaus) or credit card, so that you have access to as much credit as possible. You do not need to actually use this credit - in fact, having access to more credit than you use counts positively towards your business credit score.
4- Pay off some of your existing debt. Again, having access to more credit than you use is a positive factor in your business credit score. Paying off existing debt helps with this.
5- Read your business credit report. You may not know what needs to be fixed without reading it.
Being in control of your business credit means having the foundation for financial success! May you be successful in boosting your business credit.
