My Business Has A Credit Score?!
A business credit score tells lenders how likely your business is to repay them in a timely fashion. If you have a business credit card for your company, you probably have business credit scores too. These scores can help you secure better terms the next time you apply for a small business loan or get an insurance policy for your business.
What is a business credit score?
A business credit score is similar to a personal credit score. Just as the FICO score measures your personal credit worthiness, your business credit score measures your business’ credit worthiness.
Information from your business credit report is used to produce this score and business lenders use it when they’re considering your credit application to predict how likely you are to pay them back.
Just like a personal credit score, a higher business credit score means your business has an exceptional history of paying bills on time. One of the differences in personal and business credit scores is that personal ranges from 300-850 and business credit scores range from 0-100.
Why do you need a business credit score?
If you’re just starting your business, you are most likely using your personal credit for the borrowing. If everything is working out fine, you may be wondering why it’s necessary to have a business credit score?
Getting financing may be easier with a solid business credit score. Rates on insurance policies could be lower because as your business grows, insurance can get quite expensive. Furthermore, with your business credit score, business and personal finances are separated, making it easier to track business expenses for tax purposes. You can also get larger amounts of financing with business credit.
How can you find out your business credit score?
Business credit reports aren’t free, even if you’re the owner of the business. Regardless, it is important to check these reports once a year to compare where you stand with other business borrowers, especially if you’re planning to apply for a small business loan anytime soon. There are 3 places to check your business credit report—Dun & Bradstreet, Equifax, or Experian.
Dun & Bradstreet: The cost to get your business credit report from Dun & Bradstreet is $61.99. It provides a credit summary, 6 months of report access, Dun & Bradstreet credit limit recommendations, and industry payment benchmarks.
Equifax: The cost to get your business credit report from Equifax is $99.95. It provides a credit summary, business credit score, business failure score, payment trends, comparisons to industry norms, credit risk score, and public records.
Experian: The cost is $39.95 to get your Experian business credit score. It provides a credit summary, business credit score, public records, and payment summary trends.
How to protect your business credit
The major credit bureau, Equifax, experienced a massive data breach recently, exposing personal information such as the birthdates and Social Security numbers of millions of Americans. Credit card numbers were also stolen from hundreds of thousands U.S. consumers.
This is why it is important to protect yourself—and your business. You can find out if you were exposed in the Equifax data breach by visiting Equifax’s website and clicking on the “Am I impacted?” link.
If you were affected, you can freeze your credit with the 43 major credit bureaus, making it harder for someone to open a new account in your name. Alternately, you can place a fraud alert on your credit which tells potential creditors to verify your identity before issuing credit in your name.
If you haven’t been affected by the breach, it is still a good idea to monitor both your personal and business credit reports for any activity that looks suspicious of fraud. For your personal credit, you’re entitled to get a free copy of your credit reports every 12 months from each of the 3 major credit bureaus at AnnualCreditReport.com.