Your Business Credit Ratings: Understanding the Numbers
Your business credit score has a major impact on your business. It can determine whether or not you can expand, purchase extra inventory and get loans that you need. It is important to not only know what your score is, but also understand what it all means so that you can make improvements if necessary.
Who Reports Your Business Score?
The three credit bureaus that report your personal score also report your business credit score. These bureaus include Equifax and Experian. Each of these bureaus do things a bit differently to get the number they get, so understanding this is important.
Equifax looks at three things and offers an assessment of each to those running the credit score of your business. The first is your credit risk score which looks at whether your business will have delinquent payments or not. The range on this element is 101 to 992. The second is your payment index and this look at how well your company pays things on time. The scale for this is 100. The third part is your business failure score and this looks at how likely your business is to close. The range on this part of the score is 1,000 to 1,880.
Your Experian business credit score goes from one to 100. It looks at several things to get your number, including how long you have been in business, new credit lines in the past six months, credit applications in the last nine months, any collection activity in the past seven years, 12 months of payment history, how much of your credit you are using, late payments, available credit percentage and how many non-net-30 credit lines you have. The goal is to be low risk by keeping all of these in good standing for the highest score possible.
Dun and Bradstreet
Dun and Bradstreet scores are not something every business has as you have to go to their website and file for a DUNS number. The range for this score is 0 to 100. This is a tool that lenders use in addition to your financial stress score and credit score. This is not something that lenders look at alone to determine your overall credit worthiness.
Make sure to keep this business credit information handy so that you can use it to better your business. The credit your business has is just as important as your personal credit and when it is good, you will have fewer worries.