BUSINESS CREDIT 101

HOW BUSINESS CREDIT WORKS

Your personal credit score is based on how much money you owe, how many lenders you owe it to, and how well you pay those debts.

For your business, these things matter, too. Except, they are based only on what your business pays to and borrows from suppliers and vendors. But there’s a lot more that goes into calculating a business credit score, like the number of years you’ve been in business, how many employees you have, your yearly revenues, and the industry you’re in.

Your business’ credit score will be negatively affected if your business has defaulted on any lines of credit, lost a lawsuit over a debt, has liens on any business-owned property, or has filed bankruptcy.

Business credit scores range between 1 and 100, with 75 being considered excellent. There are 3 main companies that maintain business credit profiles: Dun & Bradstreet, Experian Business, and Equifax Business.

HOW INFORMATION IS REPORTED TO BUSINESS CREDIT REPORTING COMPANIES

Suppliers and vendors report to the business credit reporting companies on a voluntary basis. You may have been in business for years and have a great payment history with your creditors, yet not have a business credit profile at all! Many business creditors will report your account information for you if you ask.