Quick question: what’s a good business credit score?

When I’ve asked small business owners this question in webinars and workshops, they often guess numbers like 700, 750, or sometimes, 100. 

The answer, I respond, is “it depends.” 

That’s in part because the number that represents the highest possible credit score for small business depends on the scoring model used. And the other reason it depends is that each lender decides for itself how much risk it’s willing to take.

To help you understand how that works, here is a list of popular small business scoring model ranges the highest score for major credit bureaus including Experian, Equifax, and Dun & Bradstreet: 

Scoring Model	Score Range	Highest Possible Score
Experian Intelliscore PlusSM	0—100	100
Experian Intelliscore PlusSM V3	300—850	850
Experian Financial Stability Risk ScoreSM V2	300—850	850
Equifax® Business Delinquency Score® for Others	224-580	580
Equifax® Business Delinquency Score®	101 – 662	662
Equifax® Business Delinquency Financial Score®	101 – 715	715
Equifax® Business Failure Score®	1000 – 1604	1604
Equifax® OneScore for Commercial	300 – 660	660
FICO® Small Business Scoring Service℠ (SBSS℠)	0—300	300
FICO® Small Business Scoring Service℠ (SBSS℠) V3	300—850	850
D&B® PAYDEX® Score	0—100	100
D&B® Delinquency Score	0—100	100
D&B® Failure Score®*	1,001—1,875	1875
D&B® Delinquency Predictor Score**	101—670	670

Note that with most scoring models, a higher number indicates lower risk. In some cases, though, a lower number is “better” in that it represents lower risk. 

There’s an important lesson here: if your credit score looks very different than you expected, don’t immediately be alarmed. It may be the credit reporting agency is using a different credit scoring model than you expected. As you can see above, all of the major commercial credit reporting agencies offer business credit scores with different score ranges. 

Dig a little deeper first! 

What Makes up Business Credit Scores

Each credit scoring model is trying to predict something specific, such as overall creditworthiness or the likelihood of financial stress in the near future. And that means different credit scoring models can evaluate somewhat different information—or consider it in a different way—even if the information is coming from the same credit bureau. 

Before you get frustrated, though, keep in mind there are common factors that many credit scoring models take into account. Focus on these and you’ll likely build strong credit, regardless of which credit score is used. 

Payment history 

Almost always the most important factor in credit scoring models, this looks at whether the business pays its bills on time; and if not, how often, recently and/or severely it has fallen behind on payments. 

Age of business and/or business credit history

Businesses that have survived for 2—5 years or more are often considered lower risk. Scoring models may also take into account the age of the business credit file: when was the first account that appears on the business credit report opened? 

Credit utilization ratio

Comparing your balances to your available credit on revolving accounts such as your business credit cards or business lines of credit 

Company info

Other factors that may impact your business credit scores relate to your business itself and the industry in which it operates. A credit scoring model may consider whether your business operates as a legal entity such as a corporation or LLC, for example, rather than a sole proprietorship. 

It may also take a look at the industry in which it operates to compare your business credit with other businesses in that industry. Your industry is usually indicated by an industry code called an SIC code or a NAICS code.

Public records

Public record information is information filed with courthouses, where it becomes publicly available—including to creditors and credit bureaus. 

The types of public record information that may appear on business credit reports and affect business credit scores includes:

• Liens filed against the business, usually through UCC filings
• Lawsuits and/or judgments against the business 
• Bankruptcy 

Types of credit used/credit mix

With some credit scoring models, having a mix of different types of accounts may help your credit score. An example would be if you have a couple of tradelines, such as net-30 from vendors or suppliers, a business credit card, and a small business term loan or business line of credit. 

Recent credit inquiries

Credit inquiries typically aren’t as big a factor in business credit scoring models as they are in personal credit scoring models, but they may impact your scores, or affect an application for credit if a lender reviews the report manually. 

Meeting the Criteria for a 100/100 Business Credit Score

So how do you get that elusive perfect business credit score of 100/100—or some other number, depending on the scoring model? 

First, don’t feel like you need a perfect score. While it may make your banker’s eyes light up, you don’t need a perfect credit score to get the loans, financing or other opportunities your business seeks. 

Whether you are striving for perfection or just “good enough”, here are a few ways to get there:  

Flawless payment history over 24+ months

Paying on time is the best way to boost your credit scores, whether you’re talking about business credit or personal credit. And your most recent payment history—usually in the last 24 months—often carries the most weight. 

Having an established credit age of 2-3+ years

Establishing business credit before you need financing can be helpful. Some scoring models and/or lenders will take a look at how long you have had a credit history, and an older, more established history helps. Start building tradelines at the early stage of your new business. 

Low credit utilization (<30%)

Not all business credit scores take utilization into account, but when they do, keeping balances low can be useful. While it’s not a hard and fast rule, a good rule of thumb is to try to keep balances below 30% of available credit. Though the exact percentage may vary, that range or below is often a good place to start.  If an account doesn’t list a credit limit (which is common with business credit), it may substitute the highest recent balance.

Mix of revolving and installment credit

Again, having a couple of different types of accounts may help boost your credit scores. 

• Revolving accounts include lines of credit and credit cards
• Installment accounts include term loans and many real estate loans
• Non-financial accounts may include net-30 terms with suppliers and other tradelines

Clean public records

Since liens or judgements can hurt your business credit scores, it’s best if your business credit history doesn’t list any. If it does, try to resolve them so there is no balance due reported. 

UCC filing are more common and they aren’t always negative; however too many UCC filings may hurt your ability to get new financing. Make sure information about UCC filings is updated. Some lenders don’t bother to file a release when the debt is satisfied. 

Read: What Is a UCC Filing & How to Remove a UCC Filing

Practical Steps to Build an Impeccable Business Credit Profile

If you’re still at the stage of trying to figure out how to establish business credit, here are key steps to take. 

If you’re a startup, you will want to make sure you establish a solid foundation for your business first. Read: A Checklist for a Legit Business

Open positive trade lines 

Tradelines is a word for business accounts. In the credit industry, the term “tradelines” refers to the accounts listed on credit reports. 

Each account on a credit report is considered a tradeline. These tradelines typically include details such as the type of account, the creditor (though creditor names are usually not shown on business credit reports), the credit limit or recent high balance, current balance, and payment history.

Tradelines can be instrumental in establishing business credit. Many suppliers and vendors offer credit terms to their business clients. These net-30 vendors can be helpful to building business credit.  

When a business gets credit from a vendor, pays on time, and the account is reported to major business credit bureaus, the tradeline will usually contribute to building business credit. 

Make payments on time or before the due date

Of course, an account only helps if you pay on time. And with some credit scores such as D&B Paydex, paying on time can help you get an even higher credit rating. 

Set up systems like automatic payments and/or credit alerts to make sure you don’t accidentally miss a payment.

Get business credit cards and loans

In addition to tradelines, it’s helpful to get other types of accounts. Most business credit cards report to business credit reports, and many small business loans are reported to business credit, either directly to commercial credit bureaus or through the Small Business Financial Exchange (SBFE). 

Monitor credit utilization carefully

Keep an eye on your balances on credit cards and lines of credit. If you need to tap credit when cash flow is tight, that’s understandable. Work on paying down balances when you can. 

Dispute any inaccuracies

If you find mistakes, you’ll need to dispute them. Each credit bureau has its own procedure for disputing mistakes on credit reports. 

Be patient and persistent

Building credit takes time. Don’t expect overnight results. Sometimes that happens, but be willing to hang in there for the long-term. Think of it like building muscle: it’s good for the long-term financial health of your business. 

Capitalizing On a High Business Credit Score

Once you have a good credit score, here’s how you may be able to leverage it.

Access to best loan rates and terms

Some lenders check business credit, some check personal credit, and some check both. In addition, some credit scoring models like FICO SBSS, a FICO score developed for small business decisions, can analyze data from both personal and business credit to create a single score. 

Business credit doesn’t guarantee an approval, but it can help open up more options including types of loans, lower interest rates, and/or higher credit limits. 

Higher spending/financing limits

Good credit may mean higher loan amounts and/or credit limits. 

Negotiating power with suppliers/vendors

Net-terms with vendors and lenders can be helpful for managing cash flow. Buy what your business needs, and pay for it later—hopefully out of revenue. Many suppliers check business credit and a good credit rating may help you move from COD or net-10 terms to net-30, net-60 or even longer. 

Attractive to investors/partners

Anyone can check your business credit. A company thinking about doing business with yours, or one that may want to buy your business, may check business credit as part of the due diligence process. And since they don’t need your permission, you may not even know a prospective business partner checked yours. Make sure your business looks solid if they do a credit check. 

Separate business and personal credit fully

Separating your business and personal finances can be helpful for a number of reasons, including taxes and tax deductions, protecting your personal credit from your business, asset protection, and more. 

Maintaining a Perfect Business Credit Score

Again, you don’t need perfect credit: you just need credit that gets you the financing or benefits you need. If you’ve maintained good business credit, you’ll want to keep it. Here’s how:

Continued financial discipline

Running a business has its ups and downs. Clients may pay late, sales can suddenly tank (or take off), or costs can suddenly escalate. Preparing for potential changes through careful cash flow forecasting and financial planning is crucial.

Monitor reports from major bureaus

Business credit monitoring helps you stay on top of changes in your business credit reports. You can see what lenders report, and get alerts to changes in your credit reports.   

Avoid credit overextension

There will be times when your business needs or wants to borrow. It could be to help your business get through a cash flow crunch, or you may want to invest in inventory, real estate or other opportunities to help your business grow.

Try to be strategic when you borrow. Make sure you’re getting the right type of financing to fit your business needs, and at the best possible terms. 

Nav can help you find financing based on your unique business data. 

Manage personal credit in parallel

Don’t overlook the importance of building and maintaining strong personal credit. Some small business financing options involve a personal credit check, especially if your business is fairly new, operates as a sole proprietorship, or doesn’t have strong business credit. 

How Nav Helps Businesses Gain Their Best Business Credit Scores

Nav’s unique suite of tools can help your business check, build, and monitor your business credit. 

With a free Nav account, you’ll get insights into your business and personal credit, along with alerts to help you in your credit journey. 

With Nav Prime, you’ll get detailed business credit reports and scores, as well as detailed personal credit reports and scores, in one dashboard. 

With both types of accounts, you’ll get alerts, as well as updates when you log in monthly to stay on top of your credit. You’ll also get an objective view of funding options for your business, from a range of financial solutions.

Get started with Nav today. 

*The D&B Failure Score isn’t a single number. It consists of three components: a percentile (1-100) with 100 indicating the lowest probability of failure, a risk class (1-5) with 1 indicating the lowest probability of failure (and 5 associated with high risk), and the score with a range of 1,001 and 1,875. 

**Similarly, the D&B Delinquency Predictor Score has three components: a percentile of 1 to 100 (where 100 indicates businesses that have the lowest probability of severe delinquency), a class of 1 to 5 where 1 indicates the lowest probability of severe delinquency, and the score itself, which ranges from 101 to 670 where 670 indicates the lowest probability of paying at least 10% of its dollars more than 90 days late (severe delinquency), filing for bankruptcy, or going out of business without paying all creditors.