Eclectic-Systems

Business Credit Basics

Simply put, business credit measures how well your business pays its bills. It’s separate from personal credit and can be a powerful tool to give your business financial flexibility.

Business credit scores are calculated by business credit bureaus like Dun & Bradstreet, Experian, and Equifax. These bureaus collect data from lenders, suppliers, and public records to assess your business’s financial responsibility. Business partners can use it as a gut-check of your business’s trustworthiness when deciding to work with you.

For business owners, a strong business credit score can translate into lower interest rates, better trade credit with vendors, and access to the financial support you need to grow and maintain your business.

What is Business Credit?

Business credit is a company’s history of buying something now and paying for it later. It’s like a rating for how consistently you pay your bills on time. A good business credit rating may make it easier to borrow money when your company needs it and to win large partnerships, such as government contracts.

Why Business Credit Matters

A strong business credit score can give your business more options. Lenders and other creditors check business credit to determine how likely your business is to pay bills on time — and decide whether to offer financing. Potential clients, particularly large ones, may look at your business credit history to assess how stable your business is, and therefore if you are likely to be able to fulfill an order or complete a project.

Your scores can also help you:

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Frequently Asked Questions

How is business credit score calculated?

The business credit bureaus use varied models to calculate business credit scores, but most of them consider the following factors:

  • Payment history
  • Debt utilization
  • Credit age
  • Credit inquiries
  • Types of credit

Learn more about the factors that influence business credit scores.

How long does it take to build business credit?

Building business credit is a long-term process. It may take a few weeks, or even a month or more, before new tradelines (business accounts) first appear on your business credit reports. Once they do, you’ll need several months of on-time payments to establish a good business credit score.

Are business credit scores public?

Business credit scores aren’t as protected as personal credit scores. Any lender or vendor can pay to pull your business’s credit reports at any time. It’s a good idea to manage your credit reports to make sure that future creditors approve of what they see and will want to work with you.

Does business credit affect personal credit?

Most business loans and financing don’t appear on personal credit reports. However, many different types of business loans and financing require a personal guarantee (PG). If you’ve signed a PG and don’t repay the debt, it may appear on your personal credit reports as a charge-off or collection account. While this isn’t common, it is possible for business credit to impact your personal finances.

The three main business credit bureaus in the U.S. are Dun & Bradstreet, Experian, and Equifax.

What business credit score do I start with?

Business credit scores have different ranges. The Experian Intelliscore (versions 1 and 2) and the D&B PAYDEX® score both start at 0 and go up to 100. Other scores may start at a different number.

If your business hasn't established credit, you may have a low credit score or no credit score at all. This is very common, even for companies that have been operating for many years.

If your business credit score is low, it doesn't necessarily mean you have bad business credit (negative accounts). It may simply indicate a lack of sufficient payment history or too few credit references.

What is a good business credit score?

A good D&B PAYDEX® score is typically 80 or above, which indicates you pay bills early or on time. For Experian Intelliscore, scores of 76–100 are considered low risk.

Ultimately, it’s up to lenders and other companies that purchase credit reports and scores to decide what credit scores are acceptable.

Learn more about business credit scores.

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