What is a business credit score and how does it work?
Building and improving business credit takes time, and many factors are involved. Learn about what a business credit score is, and how to improve it.

Understanding business credit can help position your business for growth. Establishing credit may help you qualify for business loans, and improving your business credit score may give you access to better financing options, including lower interest rates.
A business credit score is similar to a personal credit score, but there are key differences. Both are based generally on borrowing and repayment history, but business credit considers a range of factors related to your business, including how your business is structured.
This article will explain the ins and outs of building business credit, including:
- What a business credit score is
- How a business credit score is calculated
- How to build and improve your business credit
- Why a business credit score can help your business
- What information is in a business credit report
- How to get a business credit report and check business credit score
What is a business credit score?
A business credit score is a number assigned to a business by a credit agency that indicates how risky the company may be to do business with or loan money to. A higher score tells lenders that a business pays on time and poses less credit risk. A business with a higher credit score may receive better terms on financing, including potentially lower rates.
Three main credit data services maintain business credit scores in the United States: Dun & Bradstreet, Experian, and Equifax. While the three are similar, they each have their own data collection and scoring systems, resulting in slightly different reports and scores. Some lenders rely on Fair Isaac Corporation's (F I C O) Small Business Scoring Service (S B S S), including those that administer U . S . Small Business Administration loans. SBSS scores are based, in part, on data from Dun & Bradstreet, Experian, and Equifax. footnote 1
Dun & Bradstreet and Experian use a scale of 1-100, and Equifax has a credit risk score that ranges from 101-992. footnote 2 S B S S scores range from 0 to 300 footnote 3 . In addition to their basic business credit scores, the services have other business data and scoring systems, such as Equifax’s failure risk score, which indicates a business’s risk of bankruptcy.
How is a business credit score calculated?
Here are common factors that can positively or negatively affect your business credit score:
1. Payment history
Making timely payments for loans, lines of credit, and credit cards is fundamental to good business credit. A business's history of paying vendors on time can also be a factor.
2. Age and size of a company
A business that has been around longer can be considered more stable and less risky, as can larger companies.
3. Age of oldest financial account
Having a longer history of responsible borrowing can help a business's credit score.
4. Credit mix and utilization
Maintaining and using a mix of credit—credit cards, vendor tradelines, a business line of credit, for example—can benefit a business credit score.
5. Public records
Business credit agencies track legal filings that may negatively affect business credit, such as business bankruptcies and tax liens on a business.
6. Credit inquiries
Credit agencies can view multiple credit inquiries in a short time span as a sign that a business may be facing financial troubles. However, a single credit inquiry is typically not a cause for concern.
7. Industry failure risk
Industry trends can influence a business credit score, such as competition, regulatory changes, consumer behavior shifts, and technology.
What are some ways to build business credit or improve your business's credit score?
Building and improving business credit takes time, and many factors are involved. While no one action is guaranteed to raise your business credit score, these actions may help:
1. Register your business as a legal entity
Along with registering your business as a legal entity (you may want to consult an attorney for this), you must apply for an Employer Identification Number (E I N) through the Internal Revenue Service. Banks typically require an E I N to apply for small business loans or lines of credit.
2. Separate personal and business finances
Mingling personal and business financing can make it more difficult to build business credit. The sooner you separate personal and business finances, the easier it will be to track and demonstrate the financial performance of the business and start to build business credit.
3. Apply for a business credit card or small business loan
Start small on credit. When you're ready for a bank loan, line of credit, or other financing, you'll need to show a history of using money responsibly. Be prepared to show financial records or statements that may include an income statement, balance sheet, assets, equity, and liabilities. As your business establishes a history of responsible credit use, you may be able to apply for larger loans or lines of credit if needed.
4. Pay bills on time and use credit responsibly
After your business is approved for a loan or line of credit, make sure you manage it responsibly. Make payments on time, and use borrowing cautiously so your debt-to-credit ratio remains as low as possible.
5. Share good habits with credit agencies
Encourage suppliers and vendors to report your business's payment record to credit reporting services, such as Dun & Bradstreet. footnote 1 For business loans, business lines of credit and other business financing arrangements, ensure your lender reports to one of the three credit reporting bureaus.
6. Monitor your business credit score
Monitor your business credit score regularly to ensure the information is accurate and current, even if you've achieved a high score. Business credit monitoring services can help by providing advice on credit building. Staying on top of your credit may also help you catch business fraud or identity theft.
What are the benefits of a good business credit score?
Lenders view a higher credit score as a sign of lower risk, so they may be willing to offer better rates and borrowing terms for a less risky business. Here are a few of the potential benefits of establishing and building good business credit:
- Improved ability to obtain financing, such as business loans and lines of credit
- Better business loan terms—such as lower rates and payment terms
- More favorable payment terms
- Increased appeal to suppliers and even landlords
- Potential for positive impacts on insurance rates in some states. (Check with your insurance provider for details.)
What does a business credit report look like?
Each of the credit data services has its own format, but business credit reports typically have a few common elements:
- Business details such as company name, key personnel, contact details, and years in business
- A numerical credit score that indicates risk from high to low
- Financial details of the business, such as payment history, including delinquencies, outstanding debts, and risks associated with the industry
- Information from public records, including legal cases involving the company, liens, bankruptcies, and accounts referred to collection agencies
How can I get a business credit report and check my business credit score?
In the United States, the main credit agencies where businesses can get credit reports are Dun & Bradstreet, Experian, and Equifax. Each agency calculates scores differently based on its own data collection and scoring models. Regardless of the agency, a higher score is desirable since that indicates less risk for lenders and others who use credit scores for business decisions.
You can request your business credit report directly from Equifax, Experian, and Dun & Bradstreet (with a unique D-U-N-S® Number). Requesting your business credit report does not impact your credit score.
Understanding business credit is a smart move if you’re looking for financing now or expect to want credit in the future. To learn more about loans, lines of credit and other financing options, check out BMO’s business lending solutions.
FAQs
Personal and business credit scores both use credit history, such as amount of credit, record of borrowing and repaying loans, and types of credit, to assign a numerical credit score, with a higher score indicating a borrower is less risky. Lenders use both to evaluate potential borrowers, and a higher credit score can lead to lower loan rates and other benefits.
A consumer credit score is frequently called a F I C O Score. The score range can vary based on the bureau but typically ranges from 300-850. Business credit scores and reports are maintained by Dun & Bradstreet and Experian, which use a scale of 1-100, and Equifax, which uses a scale of 101-992.
Business credit reports tend to have more information, such as a business's payment history to vendors, the outlook for the industry a business operates in, and public court filings involving a business.
Setting up your business as a legal entity with an Employer Identification Number (E I N) can help keep your business credit and personal credit separate.
There can be some overlap in certain situations, particularly for a sole proprietor. It's not uncommon for business credit reporting services to share business credit card activity with consumer credit reports. In addition, business credit applications may ask for your Social Security Number, review your personal credit history, and require you to personally guarantee the business loan.
It’s possible that a new business does not have a credit score because the score is calculated based primarily on the business’s history, including timely payments to lenders or suppliers and its amount of debt. A new business may have no data on which to base a business credit score. It can be helpful for startups to request net-30 payment terms with suppliers to start building a history of timely payments for business credit reporting services.
Banks and other lenders use business credit scores when deciding on a loan or credit.
No, checking your business credit report is considered a "soft inquiry" that has no impact on your business credit score.
Business credit scores usually update at least once a month, but the timing depends on when creditors and vendors with tradelines report information to the credit bureaus.
You can learn more about credit scores and credit reports on the websites of Dun & Bradstreet, Experian, and Equifax.
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