Business Credit Explained

Business credit is a financial report card that evaluates your company’s ability to pay back debt. It is separate from your personal credit, and it tracks how reliably your company fulfills its financial obligations like paying bills on time.

Unlike personal credit scores, which typically range from 300 to 850, business credit scores range from 1 to 100. A score of 75 or higher indicates low credit risk to lenders, which will help you enjoy easier approvals and lower interest rates for business loans.

And while personal scores are tracked by the three large credit bureaus, business credit scores are primarily tracked by commercial bureaus like Experian Business, Equifax Business and Dun & Bradstreet.

Business credit scores are primarily determined by your payment history. To build strong business credit, you must consistently pay your vendors, suppliers and lenders on time. Other factors like credit utilization, company size and any public records such as liens or judgments may also play a role in your score.

Establishing business credit takes time and consistency. Here are a few steps to help get you on your way:

• Register your business as a formal entity like an LLC or corporation
• Apply for a free Employer Identification Number from the IRS
• Register for a DUNS number – a unique identification number from Dun & Bradstreet that’s used to track and evaluate your company’s credit history
• Open a business bank account to keep your business and personal finances separate
• Open accounts with vendors or suppliers who report your payment history to business credit bureaus – and be sure to pay your bills on time

For help with business banking, choose one of the options below.