How and where to check your business credit score

What is a business credit score?

A business credit score evaluates a company’s creditworthiness, which creditors and suppliers use to decide whether to extend credit to a business, and on what terms. Think of it as a financial report card for those who might do business with you.

Unlike personal credit scores, which assess individual financial stability, business credit scores are more directly focused on predicting credit delinquencies and managing financial risk. A lower score indicates a higher risk, which can lead to higher interest rates or outright credit denial.

Here are the key factors that affect a business credit score:

• Payment history: Does your business pay its debts on time? Consistent late payments are a red flag that suggests poor cash management and lowers a business’s score.

• Credit utilization ratio: This measures how much of its available credit a business is using. If a business is constantly maxing out its credit limits, that might be a sign that it’s overextended and could struggle to meet additional financial obligations.

• Length of credit history: The age of a business’s credit accounts can influence its credit score. Older accounts generally contribute to a higher score, as they demonstrate a longer history of managing credit.

• Debt-to-income ratio: How much debt does your business carry compared to its income? This helps lenders evaluate whether a business can comfortably manage and repay its current debts.

• Public records: Bankruptcies, liens, and judgments against a business are signals of risk that can lower its score and deter creditors from providing financing.

What are the ranges for business credit scores?

Business credit scores are assessed through multiple scoring systems, each with its own scale and criteria. You may have heard of these two common ones: Experian’s Intelliscore Plus and Dun & Bradstreet’s PAYDEX Score.

While Dun & Bradstreet’s PAYDEX Score still ranks businesses on a scale from 1 to 100, Experian updated its scoring model in 2021 to align more closely with the standard consumer credit scoring range of 300 to 850. Other business credit reporting systems may follow different rankings — though generally, the higher the number, the better the score.

Here’s how the new Experian Intelliscore Plus business credit score scale breaks down:

High risk: 300–600

Businesses within this range are considered high risk, indicating a higher likelihood that they might default on obligations. This means there’s a significant chance the company will fail to meet its financial commitments, such as paying back loans on time.

If a business’s credit score falls within this range, there are strategic steps it can take to rebuild its credit and restore its financial standing. Until then, though, it will need to be prepared for higher interest rates and limited financing options. Businesses in this range may also require collateral (such as real estate, equipment, or inventory) to secure any form of credit.

Medium to high risk: 601–660

This range suggests a moderate-to-high risk of default, which means businesses may struggle with securing favorable financing terms. They may also have to undergo more stringent scrutiny during the credit evaluation process, which can affect the ease and terms of potential credit approvals.

Medium risk: 661–720

Medium-risk businesses may be offered interest rates slightly above the prime rate or credit limits that are more conservative than those offered to companies with higher credit scores.

Medium to low risk: 721–780

Companies in this bracket are generally viewed as stable by creditors, which means they can enjoy more favorable financing opportunities with reasonable terms, increased credit limits, and more flexible repayment options.

Low risk: 781–850

If you’re in this business credit score range, congratulations — your business is in excellent financial health. Businesses in this range are more likely to qualify for the most favorable terms on loans, credit lines, and other financing options. They may also benefit from expedited credit approvals and reduced requirements for documentation.

Why you should know and monitor your business credit score

Your business credit score is more than just a number — it can also be a gateway to opportunity and stability. Understanding and monitoring it can help ensure that your business is ready for both challenges and growth.

Here are a few benefits of knowing where your business stands:

• Preventing fraud: Checking your business credit score can help you quickly spot any unusual activity, such as unauthorized credit inquiries or new accounts you didn’t open.

• Accessing additional capital: With a good credit score, you have more leverage when negotiating terms with lenders and suppliers. This could mean better interest rates, higher credit limits, and more favorable repayment terms that can have a significant impact on your cash flow and operational flexibility.

• Monitoring business health: Your business credit score can be a good indicator of your company’s overall financial health. Regularly checking your score lets you see how your business is performing over time and identify areas that need improvement.

• Building business relationships: A good credit score can boost your credibility with suppliers, vendors, and potential partners. It signals that your business is reliable and maintains its financial commitments, which can open doors to better trade terms and business opportunities.

• Facilitating business planning: Eyeing market expansions, innovative marketing campaigns, or new product lines? Understanding your business credit score helps you plan for future growth and investments. If your score is lower than you want, you can find opportunities to improve it before seeking significant financing, ensuring better terms when you do take this step.

Where can I check my business credit score?

Lenders, suppliers, and other businesses can use numerous business credit reporting systems to assess a company’s creditworthiness. Some well-known options include:

• Dun & Bradstreet’s PAYDEX Score: PAYDEX scores measure businesses’ payment performance on a scale from 1 to 100. Note that before accessing your business’s PAYDEX score, you’ll need to register for a D-U-N-S Number — a unique nine-digit identifier for businesses — on the Dun & Bradstreet website.

• Experian’s Intelliscore Plus: Experian offers detailed reports that evaluate a business’s credit risk by incorporating over 800 variables, including trade payment information, public records, new account activity, and more. Keep in mind that while Intelliscore Plus is known for its nuanced view of credit risk, it relies heavily on historical data, which may not fully reflect recent business improvements or changes.

• FICO Small Business Scoring Service (SBSS): FICO’s SBSS score ranges from 0 to 300, and is used by lenders to make credit decisions quickly, particularly for term loans and lines of credit under $1 million. This score considers personal credit history, business credit history, and financial data such as cash flow. If you apply for a loan from the Small Business Administration (SBA), they’ll use this number to pre-screen your application.

• Equifax Business: Equifax offers a business credit report that includes a company’s credit score, payment trends, public records, and comparative data within the industry. An advantage of this report is its depth of information, especially when it comes to public records. However, because Equifax aggregates data from many sources, discrepancies in data might lead to extra time spent ensuring all credit information is accurate.

• Creditsafe: Known for its role in international credit reporting, Creditsafe provides business credit checks and detailed company reports, which include everything from director information to financial accounts.

It’s important to note that most providers require payment before giving you access to your detailed business credit reports. Some credit agencies might also require you to register and provide business information before you can see your scores. This process helps accurately track businesses’ credit activities and ensure that the provided information is up to date.