Business credit score: What it is, ranges, how to improve it

Your business credit score is more than just a number—it’s a showcase of your company’s financial reputation. But how is that number calculated? How does it impact your business and what steps can you take to improve it? Whether you’re applying for a loan or negotiating with vendors, your business credit score plays a big role. Let’s break it down so you can understand what it all means and how to make it work for you.

What you’ll learn:

• A business credit score is a number typically between 1 and 100 that reflects your business’s creditworthiness, but each bureau calculates credit scores differently. 

• When you apply for credit, lenders may review your business credit score to help evaluate your likelihood of borrowing and repaying funds responsibly.

• Business credit scores can influence your eligibility for funding, insurance premium costs and more.

• You can take steps to improve your business’s credit scores by building credit with companies that report trade information, making on-time payments on business accounts, maintaining a strong personal credit score and regularly reviewing your business credit reports.

A business credit score is a measure of your business’s credit risk. It usually falls between 1 and 100. The higher your business credit score, the better your creditworthiness in the eyes of lenders, investors, suppliers and other key parties.

Many factors influence your business credit score, including payment history, credit utilization and the size of your company. Understanding the factors that influence your company’s credit score can help you improve its creditworthiness and access associated benefits.

Good business credit scores may help your business obtain:

• Better financing options

• More negotiating power

• Lower insurance premiums

• Favorable contract rates and terms

• Partnerships with other organizations

Each business credit bureau has its own scoring system to evaluate a business’s health and creditworthiness. The three main business credit-scoring bureaus are Dun & Bradstreet® (D&B), Equifax® and Experian®. FICO® Small Business Scoring Service℠ (SBSS) is another way businesses’ creditworthiness can be evaluated, though it’s not considered to be a reporting bureau. Here’s how each reporting bureau calculates business credit scores.

D&B is a global company that provides business credit ratings in the form of a D-U-N-S® Number, among other business-related services. D&B calculates many different business credit scores and reports, including: 

• PAYDEX® Score: With a range of 1-100, this score indicates a business’s likelihood of making on-time payments. Scores below 50 signal a high risk, scores of 50-79 signal a moderate risk and scores of 80-100 signal a low risk. 

• Delinquency Predictor Score: The Delinquency Predictor Score indicates how likely your business is to default on an account. The raw score ranges from 101 to 670. A higher raw score indicates a lower risk level of a business paying financial obligations severely late. D&B also assigns a delinquency class of 1-5 and a delinquency percentile on a scale of 1-100.

• Failure Score: The D&B Failure Score indicates the likelihood of a business failing and ceasing operations within a year. Like the Delinquency Predictor Score, the Failure Score comprises three components: a failure percentile ranging from 1 to 100, a failure risk class ranging from 1 to 5 and a failure raw score ranging from 1,001 to 1,875. A lower score signals a higher risk of business failure. 

• Supplier Evaluation Risk Rating: This report evaluates a business’s supply chain and assigns a score ranging from 1 to 9, with 1 being the lowest risk of a supplier going out of business within 12 months. 

• Maximum Credit Recommendation: This report shows financial institutions or banks the recommended credit limit that should be extended to a potential business customer.

Equifax provides business scores that are broken down into the following categories: 

• Credit Risk Score: Equifax’s Credit Risk Score ranges from 101 to 992 and predicts how likely a business is to become severely delinquent, i.e., more than 90 days late, or default on its debt obligations. A lower score signals a higher credit risk. 

• Payment Index Score: With a range of 1-100, this score indicates a business’s likelihood of making on-time payments on financial accounts. The higher the Payment Index Score, the lower the risk of overdue payments. 

• Business Failure Score: With a range of 1,000 to 1,880, this score indicates the likelihood of business failure within a year. The higher the score, the lower the risk of failure.

Experian uses a system called Intelliscore Plus^SM that analyzes a variety of factors related to a business’s financial and performance history. Intelliscore Plus calculates a business’s credit score range, and from there it assigns a risk level.

• Business Credit Score: With a range of 1-100, this score represents how risky your business appears to lenders. The higher the score, the lower the risk.

• Risk Class: Your business credit score directly correlates to a risk class depending on what range your business’s score falls into. The risk classes range from 1 to 5, with 1 being the lowest risk and 5 being the highest risk for potential lenders.

While this isn’t a reporting business credit bureau, FICO SBSS can be used to determine the creditworthiness of a business applying for an SBA 7(a) loan. FICO SBSS uses information from the main commercial business credit-reporting bureaus—D&B, Equifax and Experian—to assign a risk level to small- and medium-sized businesses. 

The FICO SBSS score ranges from 0 to 300, with lower scores signaling a higher risk. To secure an SBA 7(a) loan, businesses typically need a score of at least 140.

Business credit bureaus calculate your company’s credit score and other ratings based on their own scoring models. As a result, your business’s credit score may differ depending on the company that calculated it and the scoring model used. However, most business credit-scoring companies consider the following factors when determining your score:

• Number of trade experiences

• Outstanding account balances

• Payment history

• Credit utilization

• Public records related to liens, judgments or bankruptcies

• Demographics, such as business age and size

• Any potential legislation or legal issues against your business

• Changes in how your business is managing its financial obligations

By understanding what factors influence your business’s credit score, you can work to build a better credit profile and support your company’s health, financial standing and growth potential.

Business credit scores are a reflection of your business’s financial health and credit risk. While personal credit scores reflect your personal creditworthiness, business credit scores reflect your business’s creditworthiness. Business credit scores are usually between 1 and 100, while personal credit scores range from 300 to 850.

Though these two scores are separate, personal credit scores may help get you started as a new small-business owner. And certain lines of credit could impact both your personal and business credit scores. For example, business credit cards can impact personal credit if the card issuer reports to consumer credit bureaus.

You can take steps to improve your business credit scores by:

• Responsibly managing credit accounts: Business credit scores are compiled using information that’s reported to commercial credit bureaus. If you have a line of credit, like a business credit card, that reports to business credit bureaus, you can work toward improving your business credit score by maintaining responsible financial habits on this account.

• Applying for new credit: By establishing new credit with companies that report trade information—and managing these accounts responsibly—you can boost your business credit scores.

• Keeping a good personal credit score: Oftentimes, your personal credit score is considered before a potential lender or investor decides to extend you a line of credit or invest in your business. This is why it’s important to maintain a good personal credit score or take steps to improve your credit.

• Paying your bills on time: A significant part of your business credit score is based on your payment history. Ensuring you’re maintaining on-time payments on your accounts can help improve your business credit.

• Keeping your credit use low: Business credit-scoring models take into account how much of your available credit you’re using. Aiming to keep your business’s credit utilization below 30% can help build your business credit.

• Regularly reviewing your business credit reports: You can dispute errors on your business credit reports and ensure all information is up to date to potentially improve your business credit scores.

Different bureaus usually have their own scoring models with unique numerical ranges, so there’s no universal “good” business credit score. For models with ranges of 1-100, scores above 80 typically indicate low risk and a strong history of on-time payments. Refer to the table below for bureau-specific insights:

You can access your business’s credit scores by getting your business credit reports from Experian, Equifax and D&B:

• Dun & Bradstreet: To request a credit report from D&B, you’ll need a registered D-U-N-S Number. You can request a free one online. Once registered, you can request a report with your PAYDEX score and other business credit information.

• Equifax: Your Equifax business credit reports include your Equifax Business Payment Trend, Payment Index and Risk scores

• Experian: Your Experian business credit reports include your Experian Intelliscore Plus business credit score and Financial Stability Risk Rating.

Your business credit scores show lenders and potential partners how you manage money. With healthy scores, your business has an essential tool to help it successfully grow.

Looking for a new business credit card? Check out the range of business credit cards from Capital One and see if you’re pre-approved to access the many benefits and rewards we offer to support your company’s growth.