When it comes to credit scores, many of us think of FICO scores first. FICO creates the formulas that are behind billions of credit scores used by lenders, insurers and other businesses. 

Most of FICO’s credit scores are used to evaluate personal finances, not businesses, though there is an exception we’ll talk about in a moment. 

Business credit scores are credit scores created to evaluate small businesses, instead of consumers. Business credit scores are used to help business owners qualify for small business loans, get better terms with suppliers, or even land new contracts.

Is a Business Credit Score Different From Personal Credit Scores?

Business credit scores and personal credit scores have key similarities and differences we’ll explore here. 

The major business credit bureaus are Dun & Bradstreet, Equifax, and Experian. The Small Business Financial Exchange provides information to those bureaus as well.

If we’re talking about personal credit history, the major credit bureaus are Equifax, Experian and Transunion^®. 

Let’s look at the similarities between business and personal credit scores first:

Purpose

Both types of scores are designed to assess risk. They help lenders, insurance companies, and other businesses decide whether to extend credit or do business with you. They are both developed by analyzing what actions are associated with high risk or low risk. 

An example: an analysis of thousands of credit reports reveals that individuals or businesses whose credit reports show recent late payments are at a higher risk of defaulting in the next 90 days. 

Impact

And for small business owners or consumers, having bad credit can make it more difficult to qualify for low cost opportunities. Good credit scores, on the other hand, can help you or your business qualify for loans, get higher credit limits, and/or qualify for better insurance or interest rates. 

Good credit is a decision

Here’s another similarity: Ultimately, it’s up to lenders or other businesses who use credit scores to decide what credit score range is considered good credit or bad credit. Ultimately it’s the business that purchases them to decide what scores are considered good business credit scores or bad credit, for example.

Now let’s look at differences between business and personal credit scores. 

What they evaluate

Business credit scores look at your company’s financial behavior. They track whether your business pays bills on time and how it manages debt. Personal credit scores, like FICO, focus on payments and balances on personal credit, including mortgages, student loans, auto loans and personal credit cards. 

Score ranges

Most personal FICO scores range from 300 to 850, with a higher number representing lower risk. Business credit scores often use different scales. For example, Dun & Bradstreet’s PAYDEX® score ranges from 0 to 100. But there are many other credit score ranges, as you’ll see in this article about the highest possible business credit scores. 

Access

Anyone can purchase a business credit report and/or business credit score. Personal credit scores can only be purchased by someone with “permissible purpose” under the federal Fair Credit Reporting Act. (That usually means a valid credit or insurance-related reason for ordering a report.) 

Score factors

While both types of credit scores usually consider payment history as the most important factor, it’s especially important with business credit. Personal credit scores usually take into account credit utilization, credit age, new credit and inquires, and credit mix. 

Business credit reports may not contain the same level of detail for all of those factors, and as a result, payment history remains the most important factor by far. 

Information sources

While most lenders that extend personal credit report account information to all three major credit bureaus, not all business credit accounts are reported to all major commercial credit bureaus. In practical terms, this can often result in wider variations in business credit scores from bureau to bureau. 

What Is a FICO Score?

Even though you’ve probably heard of FICO scores, you may not be sure what they are. FICO credit scores were first created by the Fair Isaac Corporation in 1989. 

FICO analyzes data to create a three-digit number that helps lenders and insurers quickly evaluate risk. Most FICO scores range from 300—850, and lenders have the choice of many different versions of FICO scores (called “scoring models”). New credit scoring models are introduced periodically. Some models are tailored to specific industries, such as auto scores for auto loans or bankcard scores for credit card issuers.

The same basic factors go into most FICO scores, though individual factors may be considered differently depending on the scoring model. The main factors are:

1. Payment history: Do you pay your bills on time?
2. Credit utilization: How much of your available credit are you using?
3. Age of credit history: How long have you been using credit?
4. Credit mix: Do you have different types of credit accounts?
5. New credit and inquiries: Have you opened several new accounts recently?

FICO isn’t a credit bureau, though, so the data that is used to create the FICO score typically comes from a credit report. Lenders will purchase FICO scores from one of the major consumer credit bureaus, Equifax, Experian or TransUnion^®. 

Your individual FICO scores may vary depending on the credit bureau that supplied the information, and the scoring model used. 

For small business owners, your personal FICO scores can affect your financing options. Some small business lenders will pull a personal credit report and/or a personal credit score when you apply for business financing, particularly if your business is new or small.

Is a FICO Score the Same as a Credit Score?

FICO creates the formula for many of the credit scores used by lenders, insurers and other businesses. They also create credit-based insurance scores, and other types of risk scores.

Most FICO score are credit scores, but not all credit scores are FICO scores. 

While FICO scores are widely known, they’re not the only credit scoring model available to lenders. VantageScore^® is another important player in the credit scoring world. Created in 2006, VantageScore is a joint effort by the three major credit bureaus: Equifax, Experian, and TransUnion^®. It aims to offer a more inclusive approach to credit scoring.

VantageScore looks at a wider range of financial information, including rent payments, utility bills, and phone bills (when available). It can also generate a score for people with a shorter credit history than many FICO scores. This broader approach can be especially helpful for those new to credit or with limited credit history.

Another key feature of VantageScore is its consistency. All three credit bureaus use the same model, which can lead to more consistent scores across bureaus.

For small business owners, especially those new to credit or with limited credit history, VantageScore might offer a more complete picture of creditworthiness. This could be helpful when applying for business loans or credit.

But remember, while VantageScore is gaining popularity, FICO scores are still more commonly used by lenders. It’s a good idea to keep an eye on both to get a full picture of what lenders may see and use.

What Is FICO SBSS and How Does It Work?

The FICO^® SBSS℠ (Small Business Scoring Service℠) score is a specialized credit score used by banks and other lenders to evaluate small businesses. Certain SBA loans require lenders to pull a FICO SBSS score when screening applications. 

The version most commonly used ranges from 0 to 300, with higher scores indicating lower risk. For SBA Small Loans, a minimum score of 155 is required for pre-screening, though many lenders have a higher threshold. A newer version—FICO^® Small Business Scoring Service℠ (SBSS℠) V3—has a score range of 300 to 850.

What is different about the FICO SBSS score is that it can consider multiple data sources, including:

• Personal credit reports of multiple business owners
• Business credit reports
• Application data
• Business financial information

The weight given to each factor can vary, but personal credit data often plays a significant role, especially for newer businesses.

Improving your SBSS score primarily involves strengthening both your personal and business credit history. This might mean paying accounts that report on time, reducing credit utilization, and establishing a solid business credit profile. 

Because it can take time to significantly improve this score, you’ll want to work on your credit early on in your business, to help position your business more favorably for financing opportunities.

How Do I Check My Business’s Credit Score and What Factors Influence It?

Unlike personal credit reports and scores which are available for free from multiple sources, generally you must purchase business credit scores.

You can do that by going directly to major commercial credit agencies like Dun & Bradstreet^®, Experian^®, and Equifax^®. Each credit reporting agency creates its own credit scoring models, so it’s a good idea to check with more than one bureau. 

However, you can save time—and money—with Nav and Nav Prime, which allows you to check, monitor and manage personal and business credit in a single dashboard. 

In terms of the factors that influence your your business credit score, keep in mind that each model will have its own formula that may include the following factors:

• Payment history: By far, this is the most important factor. On-time payments help your credit scores, and late payments or delinquencies hurt them. (Paying early may further boost a D&B PAYDEX score.)
• Credit utilization: This factor may consider how much of your available credit you’re using. Lower utilization can be helpful.
• Length of credit history: Older accounts can often boost credit, by showing a track record of managing credit.
• Public records: Items like bankruptcies, judgments, or UCC liens can impact your score.
• Company size and industry: Some scoring models consider these factors to provide context around your businesses’ age and market impact. 

If you aren’t familiar with commercial credit, here’s how to establish business credit.

How Can I Improve My Business Credit Score Without Harming My FICO Score?

Here’s some good news: you can build business credit even if your personal credit scores aren’t strong. These are often effective ways to build business credit:

Get tradelines

Build relationships with suppliers who offer trade credit and report to business credit bureaus. Pay these accounts on time or early to establish a positive payment history for your business. These tradelines won’t appear on your personal credit report, so they won’t affect your personal FICO scores.

Resource: Easy Approval Net-30 Accounts That Build Business Credit

Another option: Nav Prime submits monthly as a tradeline to major credit bureaus

Use business credit cards

Get business credit cards or charge cards that report to business credit bureaus. Use these cards for business expenses and pay them on time. This can provide a valuable credit reference. And most business credit cards do not report to personal credit unless you default. 

Monitor your credit

Regularly check both your business and personal credit reports. This helps you catch mistakes and potential fraud. 

As we’ve mentioned, some lenders use a personal credit check, some use a business credit check, and some check both—or neither. Again, when you’re a small business owner, both personal and business credit matters so you’ll want to know what your reports say about you and your business.