Understanding your business credit score is key to your company’s financial health and success.
It shows lenders and suppliers how your business is performing—but there’s more to it than that.
In this guide, we’ll explain what a business credit score is, why a good one matters, and the factors that affect it. Plus, we’ll share tips to help improve your score if it’s running low.
A business credit score is a rating that gets assigned to your company based on your business’ credit history. It shows how good you are at repaying your debts, managing your financial obligations, and provides a snapshot of your financial status.
Every business will have its own credit score, which will demonstrate creditworthiness to potential creditors, partners, and investors. Understanding your credit score is essential to business success.
A good business credit score can vary depending on the site and scoring model.
For example, QuickBooks scores up to 670, with 580 or above considered good. Other sites might use different scales—but the rule is simple: higher scores are always better.
A strong credit score shows investors you’re financially reliable, unlocking more opportunities for your business.
Here are some key benefits of a good business credit rating:
The question is: how do you make sure your business always receives a good credit rating?
There are a number of factors that might influence your company’s credit rating. So, let’s explore some of the key elements credit agencies look for:
First, they’ll look at your payment history. They’ll check how timely you’ve been when paying back loans, or making payments to creditors and suppliers. Any late payments can negatively impact your score, whereas paying on time will reflect positively.
Information can also be collected from public records. This includes any legal filings or claims made against the company, or financial statements reflecting your current financial health.
Any negative records against the business will present your company as higher risk.
Any feedback from vendors regarding your payment behaviours will also be taken into account. This will give lenders insight into how your business is likely to handle repayments, which can also impact your business credit profile.
Not happy with your business credit score? Let’s take a closer look at some tips and tricks you can try to help ensure better results for your finances in the future:
Start by making it a habit to check your business credit reports regularly.
This helps you spot and fix issues early, so you can improve your credit score gradually—instead of scrambling to fix everything at the last minute.
We’d recommend finding a site that works best for you and setting up alerts. That way you can stay in the loop about your business credit report.
It’s essential that you make sure all your financial obligations are paid on time. Submitting before the due date also works in your favor, allowing you to consistently maintain a positive credit history.
If you’re struggling, reach out to your creditors to negotiate payment arrangements directly and avoid negative reports.
Staying in touch and keeping the lines of communication open can really help when you’re facing cash flow issues.
It’s not just about understanding your own business credit score, but it’s also essential to assess the creditworthiness of other businesses. This will allow you to mitigate any risks when working with clients and partners, helping to avoid issues with late payments and defaults.
First, you need to know how to interpret different credit scores. Agencies will use varying credit score models—some may use a 0-100 range for their ratings, others may use 0-1000.
Higher is always better. A poor credit score usually sits within the lower quartile of whatever metrics are being used. Most credit agencies use a color-coded system to indicate different levels of good, moderate, and bad.
If the company you’re working with has a more moderate or lower credit score, you don’t have to write them off completely. We’d suggest adjusting payment terms based on the risk.
For example, you may ask for a deposit prior to an agreement, offer shorter payment periods, or higher interest rates. This will enable you to safeguard your cash flow.
Your business credit score is a key part of your company’s financial health and operations.
It shows your reliability, financial position, and ability to repay loans—making it crucial to your future success.
By managing your finances proactively and checking your score regularly, you can build a strong foundation for growth and long-term success.
Struggling to keep track of payments and loans? QuickBooks allows you to manage your business finances with ease, so you never miss a payment and your credit score remains in the green.
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