November 13, 2018 Credit en_US Your business credit score can affect your company's ability to grow. Here's where to find your score, how it's calculated, and how you can improve it. Your business credit score: What small business owners need to know

Your business credit score: What small business owners need to know

By Chris Scott November 13, 2018

You’ve decided you’re ready to grow your small business, gain more clients, and earn more revenue.

You’ve even decided it’s time to bring on some full-time employees to help with the additional business. You want to give business credit cards to a few employees to help manage expenses. You also want a business loan so you can open a new office and begin manufacturing in another state.

As you go to open these new lines of credit, optimistic about your future growth, you’re hit with the sudden realization that your business credit score isn’t very good. Your small business loan and credit cards are denied, and you’re back to square one.

Does this situation sound familiar? Perhaps you or a fellow business owner you know has suffered a fate similar to this one.

In this article, we’ll cover everything you need to know about business credit scores. We’ll outline what they are and why they’re so important. We’ll also provide you with a few tips that you can use to boost your score.

What are business credit scores?

A business credit score is a number that allows companies like credit card issuers to determine the likelihood that you’ll repay credit. As we’ll dive into below, there are a couple of different agencies that calculate and report business credit scores. These groups have different figures they use to quantify credit. But, generally speaking, the higher the number, the better the score.

These agencies rely on various criteria to determine the credit scores they give. Generally speaking, the five factors that the major business credit bureaus use to make up your score are:

  1. The amount of time you’ve been in business
  2. Your payment history and whether you’ve ever had to make late payments
  3. Your credit utilization ratio, which is the amount of credit you use versus the amount you have available
  4. Your credit mix, which is how you use your credit. Do you only have one type of credit? Or do you vary between trade lines, credit cards, and loans?
  5. Your business credit history. The worthwhile thing here is that there could very well be errors, as reporting credit information is not an exact science. A mistake on your report could lead to a lower score.

Understanding how business credit reporting agencies operate can help achieve a good credit score. But why do you want to have strong business credit in the first place?

Why are business credit scores important?

A business credit score is an essential element of your continued success. It determines how creditworthy you are to lenders and allows them to decide whether or not they’re willing to extend you a line of credit.

When that line of credit could be the only thing standing between you and success, failure to achieve it could set your business back years.

Not only will a higher score increase the likelihood of being approved for a line of credit, it could also allow you to secure more favorable terms like lower interest rates.

Unfortunately, many small business owners don’t recognize how important a good business credit score is — or that they even have a business credit file.

For instance, the Small Business American Dream Gap Report from Nav found that:

  • 45% of owners did not know they had a business credit profile
  • 72% of owners did not know where to find information on their credit report
  • 82% did not know how the score ranges of the reports worked

The study also found that those who understand credit scores and the concepts behind building business credit are 41% more likely to be approved for a bank loan.

To further prove this point, consider the following information from the National Association of Small Business Owners 2015 Year-End Economic Report, which demonstrates the wide-reaching uses of credit in business financing. The survey found that 73% of small firms used funding in the last year and that:

  • 41% used a bank loan
  • 31% used a credit card
  • 16% used a vendor credit
  • 14% used a private lender
  • 4% used leasing
  • 4% used an SBA loan
  • 1% used angel funding or venture capital

It’s also worth noting that personal scores are different from business scores. This is one of the many reasons why it’s essential to keep your business finances separate from your personal finances by doing things like opening business bank accounts and credit cards.

How are personal credit scores and business credit scores different?

If you’ve ever rented an apartment, bought or leased a car, or opened a credit card, you’re probably familiar with your personal credit report.

This score is generated by three different credit bureaus — Equifax, Experian, and TransUnion. These consumer credit agencies use two different scales: a FICO score and VantageScore. You’ll need your Social Security number and other personal information like your most recent address to view your personal credit history.

There are some scoring differences between FICO scores and VantageScores. The nuances between each scale are relatively nominal, but in all cases, the higher the score, the better your creditworthiness in the eyes of lenders.

Consumers are entitled to one free credit report every 12 months. However, this report doesn’t include your actual credit score. You typically need to purchase your credit score, although many credit card companies have begun incorporating it as a free perk.

There are some significant differences when it comes to business credit scores. Four primary companies offer business credit scores. They are:

  1. Dun and Bradstreet®
  2. Experian®
  3. Equifax®
  4. FICO®

You’ll notice that TransUnion does not provide business scores even though they provide personal scores. While the company doesn’t provide business scores, it does offer tools to small business owners, such as the ability to run credit screens.

To secure your business report, you’ll need to supply your employer identification number or your Dun & Bradstreet number — more on that below. But the main point is that your Social Security number won’t help when it comes to running a credit check on your business.

Additionally, the information contained in the two reports tends to vary. Whereas a personal report tracks things like current accounts, closed accounts, collection accounts, and public records, business accounts follow things like banking, trade, and collection history as well as any liens or judgments against the business.

How are business credit scores calculated?

Generally speaking, your business credit score illustrates to lenders how efficiently and reliably you pay back your business debts. Here’s a quick breakdown of the four business credit scores and how each company calculates your score.

Dun & Bradstreet

Dun & Bradstreet uses a combined score that relies on two separate elements: your commercial credit score and your financial stress score. Dun & Bradstreet also uses a proprietary PAYDEX® score. The Dun & Bradstreet PAYDEX score measures a business’s likelihood to pay its debts on a scale of 0 to 100.

This score is calculated using the business’s history of on-time debt repayment, as well as reports from suppliers and vendors regarding their interactions with the company.

A financial stress score rates the probability that a company will stop conducting business in the next 12 months. The other elements that Dun & Bradstreet uses to calculate business credit scores are:

  • Delinquency Predictor Score
  • Supplier Evaluation Risk Rating
  • D&B Credit Limit Recommendation
  • D&B Rating
  • D&B Viability Rating®

Upon registering your business with Dun & Bradstreet, you’ll also receive a D-U-N-S number. According to the company website, “The D-U-N-S Number is used to establish your company’s D&B® file, which can help potential partners and lenders learn more about your business, and may also help them make more informed decisions about whether or not to work with you as a client, supplier, or partner.”

Signing up for a D-U-N-S number is rather straightforward. The DUNS system is widely used in the business sphere. Having a number lends credibility to your business. Additionally, a D-U-N-S number will allow you to secure contracts with the federal government.


Using a statistically-derived algorithm, Experian considers the following elements to generate your business credit score:

  • Credit, including outstanding balances, payment habits, credit usage, and credit trends over time
  • Public records, including information relating to liens, judgments, and bankruptcies
  • Demographics, including business size and Standard Industrial Classification (SIC) code

The Experian business credit report scoring model creates an Intelliscore PlusSM. This defines creditworthiness on a scale from 0 to 100.


Similar to Dun & Bradstreet and Experian, the Equifax business credit report uses a handful of indicators to measure small business creditworthiness. These factors are then accumulated into a suite of different reports allowing small business owners to select the report that most works for them.

Equifax generates a Business Credit Risk Score ranked on a scale of 101 to 992 with a low score indicating the risk of a business becoming delinquent in the next 90 days to one year.

They also generate the Business Failure Score, which predicts the likelihood a company will go out of business in the next 12 months. This is rated on a scale of 1000 to 1610 — the lower the score, the higher the risk.


The FICO® SBSS℠ Score is used by the Small Business Administration (SBA) and other lenders to make lending decisions. However, it is only available to lenders — not individual business owners. This score is measured on a scale between 0 and 300.

Consumer protection laws mandate rights for consumers regarding access to personal credit scores, but these rights do not extend to businesses. Banks are not required to tell you if they use the FICO® SBSS℠ Score in their decisions.

As with all credit scores mentioned, the higher the score, the better.

What can you do to improve your business credit score?

If you’ve recently discovered your company has bad credit, you may be looking for ways to improve your score. Fortunately, there are some things you can do.

Check your report

The first thing you need to do is check your credit report. Many business credit agencies will create business profiles based on information they’ve gathered and assume to be accurate. Start by checking your credit report to verify that the data is correct.

Pay your bills on time

The best way to start building your score is by paying your bills on time. This not only includes credit cards but loans and other credit-related payments as well.

Decrease your credit utilization ratio

If your debts are too high, lenders will be wary. You never want to use more than 30% of your available credit at any one time.

Build your business credit score to build your company

Small business owners need to pay attention to their credit score. They should take the time to investigate what their score is currently. If it’s low, figure out the reasons why and determine what you can do to start building a higher score. Having a higher business credit score will give your company more flexibility down the road.

QuickBooks Online partnered with Dun & Bradstreet to offer free business credit scores to QBO clients. Not only is this a cost-savings, but clients who have taken advantage of this offer are thrilled by the results. More than 55% of customers surveyed stated that they found access to this information very useful or extremely useful.

Don’t be caught without the information you need. Get a copy of your Dun & Bradstreet business credit score today and find out if your business has the credit necessary to grow.

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Chris Scott is a digital marketing consultant and freelance writer. He enjoys writing about personal finance and saving. He graduated from the University of Maryland with a degree in Finance and currently resides in Boston, MA. Read more