If you have a business credit card for your company, you probably have business credit scores, too — whether you know it or not. These scores may help you secure better terms the next time you apply for a small-business loan or get an insurance policy for your business.
Here’s what you need to know about business credit scores, including where to find them and how to build and protect them.
COMPARE SMALL BUSINESS LOANS
Visit Lendio to instantly compare loans from online lenders to find the right one for your business.
What is a business credit score?
A business credit score is similar to a personal credit score, such as your FICO score, which is the most popular credit scoring model.
Just as a FICO score measures your personal creditworthiness, your business credit score is a numeric representation of your company’s creditworthiness. The information on your business credit report is used to produce the score, and business lenders use it when they’re considering your credit application to predict how likely you are to pay them back in a timely fashion. A higher score means your business has a history of paying bills on time.
Here are a few key differences between personal FICO scores and business credit scores:
Range: Personal FICO scores range from 300 to 850; business credit scores generally range from zero to 100. Making on-time payments to creditors is the best thing you can do to build a good business credit score.
Standardization: Consumer credit bureaus generally use FICO’s algorithms to calculate a credit score. Business credit score algorithms don’t follow an industry standard and vary from bureau to bureau.
Data: Generally, business credit reports and scores include just the accounts you have under your company’s name, not your personal accounts. However, many small-business lenders and credit card issuers still consider your personal credit when extending terms to you.
Access: You have the right to a free personal credit report from each of the three major consumer credit bureaus — TransUnion, Equifax and Experian — once every 12 months, and you can get your personal FICO scores for free from several credit card issuers. Not so for business credit. You’ll have to pay to see your company’s credit report and score at the three major business credit bureaus, Dun & Bradstreet, Experian and Equifax.
Privacy: Only you and some select parties have the right to see your personal credit reports. But with business credit reports, all information is public, and you can get information on other companies as long as you pay for it.
Know where your credit stands
Check your free credit report and see your score. Your info updates weekly so you can track changes.
Why do I need a business credit score?
If your business is just getting off the ground, you’re probably using your personal credit to do the borrowing. If things are going…
Read More: Business Credit Score 101 – NerdWallet