How To Check Your Business Credit Score

Your business credit score matters whether you want to take out a loan, buy more inventory on credit, or expand your business. It determines whether you are a low- or high-risk borrower in the eyes of your lenders or vendors. It also impacts the terms you are able to negotiate.

For example, a low credit score may lead to higher interest rates and fees and worse repayment terms. You may be eligible to take out a smaller loan or be denied credit completely.

Many business owners don’t realize they have access to their own business credit scores, and they can easily check them. If you are a business owner who wants to check your business credit score, this comprehensive guide will help you.

TL;DR

• Your business credit score indicates to lenders and suppliers how financially healthy your business is.
  
• The three major business credit bureaus are Dun & Bradstreet, Experian, and Equifax, and they all have different scoring ranges.
  
• You can get your score for free with tools like Nav or D&B CreditSignal, but you’ll need to pay for full reports.
  
• In general, a “good” score would be PAYDEX 80+, Intelliscore 76+, or Equifax 700+.
  
• Payment history, credit utilization, and public records are some of the most important factors that make up the credit score.

What Is a Business Credit Score?

A business credit score is a number that represents how financially trustworthy a business is. Business credit scores have different ranges than personal scores, depending on the bureau.

Business lenders, suppliers, and partners evaluate this score to determine the business’s financial risk. Credit bureaus calculate the company’s payment history, debt, credit utilization, and public financial data to arrive at a score.

Why Your Business Credit Score Matters

Checking business credit score regularly helps business owners catch mistakes before they affect their funding options. Credit report errors are common, and the sooner the business owner discovers them, the less chance they have of getting a loan denied or offered a bad rate. 

The credit profile may affect more than just the business’s ability to apply for a loan, too. Many vendors and suppliers check credit reports before offering net terms, and some commercial landlords verify credit before signing a lease. The better the business owners understand what a good business credit score is, the more negotiating power they will have with lenders and vendors.

The Major Business Credit Bureaus

Three main credit reporting agencies track commercial credit in the United States. Each bureau uses its own scoring methodology and may have different information about your company.

Dun & Bradstreet (D&B)

Dun & Bradstreet is the original and the most common credit bureau. D&B’s score is called a PAYDEX and ranges from 1 to 100. As its name implies, PAYDEX specifically measures payment history. A PAYDEX score of 80 or above means the company pays its bills on or before the due date. Vendors and lenders typically consider a PAYDEX score of 80 or better as excellent.

D&B also offers other scores, such as the Delinquency Predictor Score and Financial Stress Score, which can provide lenders with an additional perspective on the company.

Experian Business

Experian’s score is called Intelliscore Plus, ranging from 1 to 100, with higher scores being less risky. The factors it takes into account when determining the score are: payment history, credit utilization, company demographics, and public records. 

Many lenders consult Experian’s reports when evaluating merchant services and payment processing applications.

Equifax Business

Equifax has the Business Credit Risk Score, which goes from 101 to 992. It informs lenders of the likelihood that the business will fulfill its obligations as agreed upon within the next 12 months. Equifax commercial reports have trade payment, financial, and public record information.

How to Get a Free Business Credit Report

A few options for getting a free business credit report exist, but the information provided will be more limited than if the business owner paid for it.

Nav

Nav provides free access to the Dun & Bradstreet PAYDEX score and Experian business credit score. The business owner will need to set up an account and enter some basic information about their business. Nav will also offer them credit monitoring alerts and personalized financing recommendations tailored to their credit situation.

The platform will keep the scores up-to-date, allowing business owners to monitor them over time. The free version is limited, but it will provide enough information for most small business owners.

Dun & Bradstreet CreditSignal

D&B provides a free monitoring service called CreditSignal. It will alert the business owner to significant changes to their credit profile. They can see their PAYDEX score and be notified about the important changes, but they will need to pay to access all the reports.

Your Business Credit Card Issuers

Some business credit card issuers give free access to the business credit score as a perk of having their card. Business owners can ask their credit card issuer if they offer free credit monitoring to their customers. Credit card issuers might also offer scores from one or multiple bureaus, with some analysis behind what is affecting the score.

Paid Options for Comprehensive Reports

Paid reports provide business owners with a more comprehensive view of their business credit score, including scores from all three major credit bureaus. It’s worth paying for more detailed reports when the business is in the process of applying for significant financing.

Direct from Credit Bureaus

Business owners can get the reports directly from Dun & Bradstreet, Experian, or Equifax. The price of these reports can vary depending on the level of detail required and the frequency of report access. A single report can cost between $50 and $200, depending on the bureau. Subscriptions offering monthly access for continuous monitoring are also available.

These direct bureau reports are the most complete, with line-by-line details about the trade lines, public records, and comparison to industry norms. They will include details about what’s affecting the business credit score, as well as recommendations for improving it.

What Is a Good Business Credit Score?

Score ranges vary by bureau, but generally, higher numbers indicate lower risk.

• PAYDEX score (Dun & Bradstreet) – A score of 80 or higher is excellent, indicating that the business pays its bills early or on time. Scores between 50 and 79 indicate average to poor credit, suggesting a history of late payments. Scores below 50 mean that payments are well behind.
• Experian Intelliscore Plus – Credit scores 76-100 are low risk and excellent, showing the business is in good financial standing. 51-75 are low to medium risk and could be considered acceptable by lenders. Scores below 50 are high risk and may affect the business’s ability to secure certain types of financing.
• Equifax Business Credit Risk Score – A rating above 700 is usually good, and those above 800 are excellent. Anything between 500 and 700 is considered moderate risk, and any score below 500 could raise concerns with lenders or payment processing companies.

Understanding Your Credit Report Components

Business credit reports contain different key sections that collectively determine the overall score.

Payment History

This is the most significant factor in calculating the business credit score. Credit bureaus report how regularly businesses pay their vendors, suppliers, and lenders per the terms you agreed to. Late payments, even one or two, can have a major impact on the score, particularly those 30 days or more overdue. 

Trade references on your account from vendors who report to credit bureaus have a direct effect on this section. Partnering with suppliers who report their payments will lead to a positive payment history over time.

Credit Utilization

Credit bureaus look at the ratio of credit balances to credit limits, and credit utilization is a key factor that makes up your business credit score. Business owners can manage their credit utilization by keeping it low (below 30% on each line of credit). High credit utilization is a sign that the company may be overextending financially.

Public Records

Bankruptcies, liens, and judgments are listed under this section and can affect the business credit score. Negative public records stay on the business credit report for seven to ten years. It is best to take care of any outstanding legal and tax issues immediately to avoid creating any new public records.

Company Information

Age, size, industry, and location of the business also make up the business credit score. The longevity of the business has a positive effect on the score. The more established a business is, the better score it should have.

When to Check Your Business Credit

Business owners should monitor their business credit reports at least quarterly. Checking reports frequently allows them to identify any errors early on and see whether their efforts to build business credit are paying off in the form of a better score. If the business is growing or planning for major financial decisions, owners should consider checking business credit reports even more frequently. 

It’s advisable to check each of the three major bureaus’ reports. This is because each bureau may have different information from the others. 

Business credit should also be more closely monitored when the owners are about to apply for a loan, line of credit, or merchant services account.

Steps to Improve Your Business Credit Score

• Check Your Business Information – The business name, address, ownership, and type of business should be the same with all credit bureaus. Inaccurate or out-of-date information may harm the score. Any errors on a report should be disputed with the bureaus in writing with the necessary documentation.
• Open Reporting Trade Lines – Business owners should work with vendors and suppliers that report payment history to the business credit bureaus. Many smaller vendors do not report by default, so business owners should intentionally look for and use those that do. On-time payments on these accounts will help build a positive credit profile.
• Make Bill Payments on Time or Early – Payment history is a significant consideration for business credit scores. The business owner can set up automatic payments or reminders to avoid missing any deadlines. Creditors can be contacted proactively if there are cash flow issues to see if the terms can be renegotiated before being reported.
• Keep Credit Utilization Low – Low credit balances in relation to total credit available contribute to a healthy utilization ratio. Regularly paying down balances and avoiding maxed-out accounts is important. Requesting a credit limit increase on existing accounts can also help with utilization when managed responsibly.
• Separate Personal and Business Finances – Business owners should also keep business checking accounts, business credit cards, and operate as a separate legal business entity.

Final Thoughts

Monitoring business credit is important and should be done regularly. When you have free business credit reports or are enrolled in a monitoring service, it’s crucial that you learn your business credit score. By keeping an eye on your business credit report, you can be more financially prepared and have funding at your disposal when you need it.

Business owners looking to learn more about business credit scores, including how to check them and how to improve them, can contact PayCompass today for guidance and support.