Having a good business credit score is always beneficial, whether you want to grow your operations, invest in equipment or infrastructure, or increase your company’s cash flow. A higher score indicates that your company has a track record of paying payments on time. 

As a result, it is critical to improving your credit score so that you may continue to seek company success for years to come. Before checking business credit scores, read this article to learn all you need to know about business credit scores and some advice on how to increase your credit score.

What is a Business Credit Score?

A business credit score provides creditors and lenders with a glimpse of your company’s financial status. It depicts whether it is likely to collapse, allowing them to assess the risk of financing to you. It also shows prospective business partners or suppliers your financial stability and creditworthiness before they embark on a working partnership with you. A lender, financial institution, or third-party firm might feel more confident about executing a financial transaction that requires credit if the business credit score is good.

Because these rankings are standardized and automated, they are the most honest approach to assessing a firm. It is crucial to remember that personal and business credit scores are not the same. A company credit score contributes to improved stability and relieves strain on the personal credit score of the business owner. 

business credit score

Furthermore, unlike personal credit ratings, which are solely available to the individual in issue and any potential lenders, business credit scores are widely open to the public, though typically for a price.

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Factors Determining Business Credit Scores

1. Payment History

Payment history is crucial for your business since it determines your Paydex score, which is based on your credit profile as a whole.

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2. Age of Credit History

The number of years after you originally opened a credit account is the age of your credit history. It contributes 15% to your overall credit score.

3. Debt and Debt Usage

High balances or too much debt can significantly impact your credit score. The good news is that as you pay down your debts, your credit score will increase fast. However, some kind of debt you have contributes to 10% of your overall credit score. If you have a good mix of both sorts of loans, it will help you improve your credit score.

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How to Check Your Business Credit Score?

Checking the business credit scores of organizations with whom you want to conduct significant business will help you stay away from the cliff. A range of free and paid services are available to verify your company credit score. However, a business may only get this information free from a few select sites specializing in credit reports for industries.

how to check your business credit score

Several commercial credit reporting companies keep track of credit scores for businesses. Dun & Bradstreet, Equifax Business, and Experian Business are three of the most well-known. In order to be tracked, you may need to apply to these bureaus. Vendors and suppliers, as well as landlords and business partners, have access to this score. It has a scale of 0 to 100, with 0 indicating a high danger and 100 indicating a low risk.

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How to Improve Your Business Credit Score?

1. Accurate Information in the Credit Reports

By submitting correct and up-to-date financial information, you may assist enhance your company’s credit score. It is preferable if you can add as many pleasant payment experiences to your dossier as possible.

credit report

Because your credit score is determined using the information in your credit report, you must double-check that it is error-free. If you discover errors in your report, you must rectify them straight away.

2. Timely Payment of Bills

Make a payment at least once a month or more frequently. Credit bureaus will notice that you are handling your funds appropriately, which will reflect in your company’s credit score. While this may seem obvious sense, it is all too easy to get caught up in day-to-day duties and let bookkeeping slip between the gaps.

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3. Monitor Credit Reports

Lenders, investors, and potential partners of a firm use a business credit report to assess the company’s financial health. On the other hand, a company credit score provides a brief overview of the information included in your business credit reports.

monitor credit score

You should watch your company credit score for changes and developments, just as you should constantly check your personal credit score over time. Monitoring your credit score will help you identify areas where you can improve, such as paying down a credit card bill.

Conclusion

Your credit score influences your ability to get a loan. The better your credit score, the more likely you are to be accepted. For starters, a business credit score can help you get credit for your firm without relying on your personal credit. Furthermore, you can receive advantageous repayment and interest rate terms. A businessman can also use it to measure an employee’s risk of bribery, as persons with a lot of debt are more likely to get bribes.

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