What is a business credit score, and how does it work?
A business credit score is a number that reflects your company’s creditworthiness and helps lenders and vendors assess risk. It’s based on factors like payment history, credit usage and public records—essentially representing your business’s financial track record. 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 repaying funds responsibly.
- Different business credit bureaus—such as Dun & Bradstreet (D&B), Equifax® and Experian®—and scoring models like the FICO® Small Business Scoring Service℠ (SBSS) calculate and evaluate business credit differently.
- 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.
What does ‘business credit score’ mean?
A business credit score is a number that reflects your business’s credit risk. Business credit bureaus calculate these scores—usually between 1 and 100—based on many financial indicators. The higher your score, the better your creditworthiness in the eyes of lenders, investors, suppliers and other key parties.
What is the difference between personal and business credit scores?
Business credit scores are a reflection of your business’s credit risk and creditworthiness, while personal credit scores reflect your individual creditworthiness. Business credit scores are based on your company’s financial activity, while personal credit scores are based on your individual borrowing and repayment history. Business credit scores are usually between 1 and 100, while personal credit scores typically 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 (SBO). And certain lines of credit could impact both your personal and business credit scores. For example, business credit cards can affect personal credit if the card issuer reports activity to consumer credit bureaus.
Why do business credit scores matter?
Business credit scores matter because they influence how lenders, insurers and partners evaluate your company’s reliability and risk, which can directly affect your ability to secure funding, reduce costs and grow your business. With a good business credit score, you can gain access to opportunities and more favorable terms, such as:
- Better financing options
- More negotiating power
- Lower insurance premiums
- Favorable contract rates and terms, including interest rates
- Partnerships with other organizations
How do business credit scores work?
Business credit bureaus calculate business credit scores using data from your business’s financial activity, such as payment history and credit usage. When businesses apply for loans, credit cards or other financial products, lenders review their business credit scores and other financial information to determine their eligibility.
Scoring models vary by bureau, and scores may change over time as new financial data is reported. To see where your business stands, you can check your business credit score by accessing your business credit reports from D&B, Equifax and Experian.
What affects business credit scores?
Business credit scores are influenced by a variety of factors related to your business’s financial activity, and scoring models vary by bureau. 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 legal actions or 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 score ranges
Business credit scores vary by bureau and scoring model, so there’s no universal range or definition of what qualifies as a “good” score. However, some scoring models use a scale of 1 to 100, where higher scores indicate lower risk.
For models with a 1–100 range, scores above 80 typically indicate low risk and a strong history of on-time payments. Refer to the table below for bureau-specific insights:
| Scoring model | Score range |
| D&B (PAYDEX® Score) | 1–49: high risk 50–79: moderate risk 80–100: low risk |
| Equifax (Payment Index Score) | 1–19: payments 120+ days overdue 20–39: payments 91–120 days overdue 40–59: payments 61–90 days overdue 60–79: payments 31–60 days overdue 80–89: payments 1–30 days overdue 90–100: payments are on time |
| Experian (Intelliscore Plus℠) | 1–10: high risk 11–25: medium-to-high risk 26–50: medium risk 51–75: low-to-medium risk 76–100: low risk |
| FICO Small Business Scoring Service (SBSS) | 0–140: high risk 140–180: moderate to high risk 180–220: low risk 220–300: very low risk |
Business credit reporting bureaus and scoring models
Each business credit bureau has its own scoring system to evaluate a business’s creditworthiness. The three main business credit bureaus are D&B, Equifax and Experian. The FICO SBSS is another scoring model used to evaluate business creditworthiness, though it’s not considered to be a credit-reporting bureau. Here’s how each reporting bureau and scoring model calculates business credit scores:
Dun & Bradstreet business credit scores
D&B is a global company that, among other business-related services, provides business credit ratings and assigns unique identifiers in the form of a D-U-N-S® Number. 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 become severely delinquent on its financial obligations. The raw score ranges from 101 to 670; higher scores indicate lower risk levels of a business becoming severely late on payments. 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. It 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 may be extended to a potential business customer.
Equifax business credit scores
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 (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 business credit score
Experian uses a system called Intelliscore Plus℠ that analyzes a variety of factors related to a business’s financial performance and credit history. Intelliscore Plus calculates a business’s credit score, 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.
FICO Small Business Scoring Service
While this isn’t a reporting business credit bureau, the FICO SBSS can be used to help evaluate the creditworthiness of a business applying for a Small Business Administration (SBA) 7(a) loan. The 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-size businesses.
The FICO SBSS score ranges from 0 to 300, with lower scores signaling a higher risk. To secure an SBA 7(a) loan, a business typically needs a score of at least 165.
How to improve your business credit scores
You can take steps to improve your business credit scores by:
- Paying your bills on time: A significant part of your business credit scores is based on your payment history. Ensuring you make on-time payments on your accounts can help improve your business credit scores.
- 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 improve 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 score.
- 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.
- 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.
Key takeaways
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 whether you’re pre-approved to access the many benefits and rewards we offer to support your company’s growth—with no impact on your credit personal score.
