How Does a Business Credit Score Work?
A business credit score is a vital measure of a company’s financial health and reliability. Lenders use this score to evaluate the risk associated with lending to a business, based on information found in the company’s business credit reports whenever it applies for credit.
A high business credit score indicates that a company reliably makes repayments on time, increasing the likelihood of loan approvals and qualifying for competitive rates. This score is also accessible to vendors, suppliers, landlords, and business partners, making it an essential part of maintaining strong business relationships. Companies must monitor and maintain their credit scores to ensure financial stability and credibility.
What Affects Your Business Credit Score?
Similar to personal credit scores, multiple factors determine a business credit score. Credit reporting agencies generate this score using data from public financial records, lenders, and vendors. Some key factors include:
1. Payment history: Timely payments to lenders and suppliers.
2. Credit utilization: The percentage of available credit currently being used.
3. Outstanding debts: Existing loans and financial obligations.
4. Credit history length: How long the business has had active credit accounts.
4. Company size and financial performance.
Providing accurate, up-to-date financial information and routinely reviewing your business credit report can help identify errors or inaccuracies. If you notice discrepancies, notify the relevant credit bureau for corrections.
Major Business Credit Scores and Reporting Agencies
There are four main business credit scores used by lenders:
1. Dun & Bradstreet Credit Score: Most commonly used for credit checks.
2. Experian Business Payment Score: Frequently used by banks and lenders.
3. Equifax Business Credit Score: Another standard measure for assessing business creditworthiness.
4. FICO LiquidCredit Small Business Scoring Service: Unlike a credit bureau, FICO uses data from Dun & Bradstreet, Equifax, and Experian to generate a score often used for SBA loan approvals.
Each agency may hold slightly different information, resulting in score variations. Additionally, credit ranking scales differ across agencies, so what is considered a good score by one may not be the same as another.
Thinking of Starting a New Business?
Now is the perfect time to bring your business idea to life! With innovative business concepts emerging rapidly, securing the right financial support is essential.
Financial constraints should never limit your dreams. If you have strong ideas and decent credit, Small Business Loans and No Doc Loans are available. At Unsecured Finances, we provide the knowledge and resources to help turn your vision into reality. Call us today to explore your funding options and take the first step toward launching your business successfully.
With over 10 years of consulting experience, Unsecured Finances specializes in helping clients acquire:
1. Unsecured Business Loans
2. Start-Up Business Specialty Loans
3. Unsecured No Documentation (No-Doc) Loans
4. Lines of Credit from $10,000 to $500,000 without assets
Apply on our website to find out if you qualify, or call today for a free consultation: 1-888-294-2584
