Know your business credit score
Monday, 22 July 2019
Personal finance gurus have long emphasized knowing your personal credit score.
It's that critical three-digit number that affects your ability to get a credit card with desirable rates, a mortgage, home loan, a great job, or an apartment.
Business credit scores are just as important to entrepreneurs, since this number determines whether you qualify for credit, and on what terms. Since business credit reports are available to the public, they may also be used by potential investors, insurers, vendors, and other partners to decide whether to do business with you. The better your business credit score, the better your chances of accessing low-interest capital, great insurance rates, and relationships with valued vendors.
There are some key differences between personal and business credit scores.
- Consumer credit scores range from 300 to 850—the higher, the better.
- All the major credit bureaus use standard measures to determine personal scores. Personal credit histories and scores are kept private.
- By law, you have access to a free credit report once a year from each of the main credit rating agencies: Experian, TransUnion, and Equifax.
- Factors may include length of credit history, timeliness of payments, number of credit inquiries, credit sources open, and percent of credit used.
- Business scores range from zero to 100—the higher, the better.
- There is no standardization for business credit score. Each bureau uses its own formula.
- Anyone can access a business credit report.
- You pay to access your own business credit report.
- Factors may include length of credit history, timeliness of payments, number of credit inquiries and credit sources open, percent of credit used, company size, length of time business has been open, and comparison of these metrics with other, similar companies—including likelihood of failure.
Monitor, monitor, monitor!
Just as with a personal credit history, it's important to keep a close eye on your business credit score. There are a number of credit-rating agencies, but the big ones are Experian, Dunn & Bradstreet, and Equifax. They all use several factors to determine your business credit score, which may consider things like payment history, credit history, public records, and information about your industry.
Not only should you know your score, you should also check your business credit report for possible errors. If you find an error, make sure you take the steps to correct your report. Collect the evidence that supports your case. This includes bank or credit card statements, invoices, notes from phone calls, and phone messages or emails between yourself and the reporting party will help expedite resolution.
Contact the credit bureaus and make your case. Each of the major reporting bureaus have an automated system for filing disputes, so check their websites and follow up. Unlike personal credit scores, these agencies do not have a time mandate for investigating disputes.
The bureaus charge modest fees for pulling your reports, but knowing and understanding your business credit score is important for any entrepreneur. Consider it an investment.
The content provided is for informational purposes only. Neither BBVA USA, nor any of its affiliates, is providing legal, tax, or investment advice. You should consult your legal, tax, or financial advisor about your personal situation. Opinions expressed are those of the author(s) and do not necessarily represent the opinions of BBVA USA or any of its affiliates.
Links to third party sites are provided for your convenience and do not constitute an endorsement. BBVA USA does not provide, is not responsible for, and does not guarantee the products, services or overall content available at third party sites. These sites may not have the same privacy, security or accessibility standards. Consult your legal counsel for advice concerning your specific business activities.
You may also be interested in:
Commercial billing FAQs for business owners
Commercial Billing Service offers business owners steady cash flow with fewer headaches. Here's how it works.
10 ways small business owners can leverage digital banking
Check out 10 ways you can leverage digital banking to save money, time and gain valuable insight you need to grow your business.