A business credit score (or business credit rating) is a lot like a personal credit score.
It’s a number that represents whether lenders can trust that business to pay back a loan.
If you’re a business, you likely have a personal credit score (also known as a FICO score) as well as a separate business credit score that you should monitor and improve whenever possible.
While some factors are out of your hands, such as risk factors for your industry, your business credit score is something you can alter with responsible spending practices and due diligence.
A good business credit score is key to financing an emerging, growing, or even robust business.
Just because you don’t know your score doesn’t mean others don’t—
And lenders of all sizes will use it to assess whether you’ll be getting that much-needed business loan.
So let’s review what goes into establishing business credit, what makes for a good (or bad) credit score, how you can check it, and everything else you might want to know.
What is a Business Credit Score?
A business credit score is usually a number from 1-100 that tells potential financiers, be they traditional banks or alternative lenders, whether your business is a good investment for them.
It also gives them an idea of how much to lend to you, and on what terms.
A high credit rating may indicate that your business has taken out loans in the past and repaid them in a timely fashion (or even ahead of schedule).
It shows you haven’t overextended your business with a number of other loans that might be difficult to pay back.
A low rating is the opposite, of course:
You’ve been late on payments, you’ve had bankruptcies against you, and you’ve loaded up on business loans.