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What Does My Business’ Credit Score Mean?

Establishing business credit—sometimes called “trade credit” or “commercial credit”—is one way to help build a solid financial foundation for your company. While maintaining good business credit boosts your organization’s ability to access capital, your credit score is also used by companies, suppliers and vendors to assess your company’s financial stability and the level of risk of doing business with your organization.

In addition to limiting your personal liability, conserving your business’ cash flow and obtaining funding for business expenses, maintaining a healthy credit score for your small business can reap lower interest rates, insurance premiums and more flexible payment terms with your supplier accounts. Understanding how your business credit score is measured, as well as the different factors that can lower or raise it, will help you get a jumpstart on building a strong credit history.

How Business Credit Differs From Consumer Credit

Your personal credit score is calculated using data from the three nationwide consumer credit bureaus: Equifax, Experian and TransUnion. Personal credit scores are three-digit numbers that range between 300 and 850, with a score of 680 or higher considered good or excellent credit.

But whereas FICO is recognized as one of the leading issuers of consumer credit scores, the scoring algorithms and calculation methods used to produce business credit scores vary from company to company. These commercial scoring systems include Dun & Bradstreet’s PAYDEX Score and Experian’s Intelliscore Plus.

Dun & Bradstreet PAYDEX Score

D&B’s PAYDEX ranges between 1 and 100 and indicates whether a company has paid its bills on time over the past 24 months. The higher your PAYDEX score, the less risk of late payment, according to the PAYDEX indicator. For example, scores above 80 are considered to be at low risk for late payment.

PAYDEX scores are broken down into the following risk groups:

  • Low risk: 80-100
  • Medium risk: 50-79
  • High risk: 0-49

You can view the PAYDEX value chart to see how D&B translates the risk level for each score within the D&B PAYDEX.

Experian Intelliscore Plus

Intelliscore Plus is a “statistically based” credit score that blends both company and personal data to assess the chances of a company going severely delinquent within a 12-month period. For instance, Experian takes into account the business owner’s consumer-credit performance, such as auto and real-estate loans, when calculating credit scores.

Business credit scores under the Intelliscore Plus model range on a scale from 1 to 100 and are divided into five risk groups:

  1. Low risk: 76-100
  2. Low to medium risk: 51-75
  3. Medium risk: 26-50
  4. High to medium risk: 11-25
  5. High risk: 1-10

Risk is considered significantly low in the first and second classes, and the third class is considered average risk. The fourth and fifth classes represent above-average risk for companies. You can find more information on Experian’s Intelliscore Plus predictor, including a sample Intelliscore Plus credit report.

Other Business Credit Scoring Models

Other scoring models used to verify the credit standing of potential business partners and clients include Equifax’s Small Business Credit Risk Score (see a sample business credit report) and the D&B Rating, which determines your company’s creditworthiness based on business size and company financial statements.

Whereas your PAYDEX Score and D&B Rating are performance-based credit scores, your company’s D&B credit file will present predictive-based credit scores. D&B’s Delinquency Predictor ScoreFinancial Stress Score and Supplier Evaluation Risk Rating predict the possibility of your company paying in a severely delinquent manner or ceasing operations. Dun & Bradstreet gives a quick breakdown about the scores you’re likely to see in your D&B business credit profile

Improving Your Business Credit Score

Similar to consumer credit scores, business credit scores are influenced by factors such as payment history and the likelihood of your business becoming delinquent on your monthly bills. Financial institutions and companies—including (but not limited to) banks, credit-card issuers and leasing firms—may pull your business credit score for a variety of purposes, including:

  • Deciding whether to accept or reject doing business with your company
  • Determining insurance premiums and interest rates
  • Finding out whether you have a history of on-time, late or severely late payments
  • In the event you’re delinquent, deciding if your account should be sent to a third-party collection agency

Before establishing a credit profile and receiving a credit score, first seek out trade partners who will report your trade (i.e. payment) experiences to the business credit bureaus. Choosing to work with suppliers who report your on-time payments to score issuers can positively impact your credit rating and subsequently improve your chances for obtaining business loans and credit in the future.

Want tips on how to boost your company’s credit score? Check out our article on improving business credit.


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