business credit scores: does your company credit score matter?

business credit scores: does your company credit score matter?

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Does your business credit scores really matter, when trying to get funding?

Unfortunately, Many business owners just don’t know how valuable business credit score are when it comes to funding. These reports exist and potentially have an impact on their business’s financial life.

What is a business credit score?

Your business credit score tells lenders how likely you are to repay them in a timely fashion. Your scores can be found at Dun & Bradstreet, Equifax and Experian. … 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.

How do I check my business credit score for free?

You need to pay to receive your business credit score directly from a credit reporting bureau, such as Equifax, but Nav allows small businesses to receive their credit score for free.

What are Business Credit Scores Used For?

Business credit scores are generally used to determine the ability of a business to repay a loan. The higher the business credit score, the more confident a lender, financial institution, or third party business can feel about completing a financial transaction that requires credit.

Why Does Your Business Credit Score Matter?

The importance of your business credit score depends on whether you’ll need business credit products. Some business owners, such as freelancers who do not expect to have employees or to require significant capital, may never need business credit cards or loans.

If you think your business might need financing, make checking your business credit score a priority and take steps to build a healthy business credit file.

Are Business Credit Scores the Same As Personal Credit Scores?

As a matter of fact, business credit scores are very similar to personal credit scores. They fall within a range, and the higher the score, the lower the perceived risk. Businesses with higher scores have a better chance at securing financing, and a higher business credit score typically means being charged a lower interest rate on financing.

In other ways, business credit scores are unlike consumer scores. Scores generated for consumers by FICO and VantageScore range from 300 to 850. But ranges are different for business credit scores. For example, some scoring models range from 1 to 100, while others range from 101 to 662 or zero to 300.

What Are the Types of Business Credit Scores?

Experian, Equifax, FICO and Dun & Bradstreet are some agencies that provide business credit scores. Here’s a little bit about each one.

Experian Intelliscore Plus. This score ranges from 1 to 100 and predicts the level of risk associated with a business.

Equifax business risk scores. Equifax offers several different scores, including the Equifax Credit Risk Score, which ranges from 101 to 992 and reflects the risk of severe delinquency on any account.

FICO Small Business Scoring Service. This score ranges from zero to 300 and is based on a combination of factors that include business and personal credit history. The U.S. Small Business Administration uses SBSS to make lending decisions on certain small business loan programs, including 7(a) loans.

Dun & Bradstreet Paydex. This score ranges from 1 to 100 and shows not just whether you pay your bills on time but also when you’ve paid. “The Dun & Bradstreet performance-based rating is designed to predict the reliability of the company and the likelihood that the business will pay its bills on time,” says Amber Colley, senior vice president at Dun & Bradstreet.

Conclusion:

As a business owner, you need to know your business credit score. Your business score could help you get business loans and business credit cards.

It’s not hard to build a strong business credit score, but you have to know which credit score matters when it comes to funding.

If you want to learn, how to build your business credit score the correct way check out 3wayfunding.com.