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Many business owners find their personal credit affects their business financing. They may be unaware of separate business credit scores that can help them protect their personal ones. Building strong business credit scores can give you a huge advantage.

We recently spoke with a business owner who openly discussed an all too common problem in the world of small business ownership:

“I started out with a really good credit score. Now, it’s not so great. Not because of derogatory marks, but because I’m maxed out. I’ve financed forklifts, I’ve financed trucks, I’ve financed manufacturing equipment. I am the personal guarantor on our lease.”

The good news is that if you know something about personal credit, learning about business credit will come easy, as many of the day-to-day details are the same for both.

What are business credit scores?

Personal credit scores rank your personal creditworthiness based on factors such as your payment history, the length of your credit history, your outstanding debts, public records, etc. Business credit scores rank your business’s creditworthiness based on similar factors but may add a few, such as the size of your business and the risks unique to your industry. Your business credit scores can give potential lenders and suppliers a look at the past, present, and future credibility of your enterprise, depending on which business credit score they are using. Strong scores indicate that you pay your bills on time and keep cash flowing. Weak scores indicate the opposite.

How are they determined?

Business credit scores are calculated by a number of different agencies, of which the main three are: Experian, Dun & Bradstreet, and FICO. The score ranges of these agencies differ significantly from those that keep track of personal credit scores, so let’s take a closer look at each of them in turn.

  1. FICO. FICO is a major player in the world of personal credit scores, a fact that tends to eclipse the importance of its business scoring model. Their business credit score, known as the FICO® Small Business Scoring Service (FICO SBSS), combines personal and business credit information to create a score between 0 and 300, with a higher score indicating lower risk. FICO doesn’t collect payment information, so this score is based on information held by one of the three major personal credit reporting agencies and information from a commercial credit reporting agency.
  2. Experian. Experian’s credit scoring model, the Intelliscore PlusSM, is a forward-looking model used by lenders to predict the likelihood of delinquency over the next twelve months. The Intelliscore range is 1 to 100. The higher the score, the better for your business.
  3. Dun and Bradstreet. D&B’s model is called the Dun & Bradstreet PAYDEX. It too ranges from 1 to 100, but rather than predict a business’s ability to pay its bills during the coming year, it analyzes how well the business paid them during the past year. A score of 100 indicates that the business paid 30 days early; a score of 80 indicates that it paid on time; a score of 50 indicates that it paid 30 days late. The PAYDEX is often what your suppliers and vendors look at when deciding what terms to extend you on trade credit.

The fact that each of these agencies is a separate entity means that your business credit score might vary from one to the next. This is normal because different creditors report to different bureaus, and the agencies aren’t gathering identical information about your business.

Why do I need to pay attention to these scores?

A strong credit score opens doors; a weak or nonexistent one keeps them shut. A strong business credit score increases the likelihood of getting approved for loans, credit limit increases, and generous vendor payment terms, among other advantages — all while safeguarding your personal credit score and eliminating the need to accrue mountains of personal debt in order to fund your business.

Negative information on your business credit reports can hurt you whether it’s accurate or not. A sudden dip in your credit score might signal an error on one or more of your credit reports, which should be pinpointed and disputed as quickly as possible. The only way to do that is to stay on top of things. This goes for both your personal and business credit..

Whether you’ve just started a business or been in the game for years, building a strong credit profile is essential to stay competitive. You can monitor your business’s scores for free and and discover tips to improve them at Nav.com.


Lydia serves as Content Manager for Nav, a free site giving business owners access to their business and personal credit scores, along with tools that match them to the best financing and services.