A Guide to Understanding and Obtaining Your Business Credit Score

Imagine this: You are an entrepreneur with a transformative idea. You have worked hard, built a remarkable team, and sought funding to achieve your vision. However, there’s one thing standing in your way, i.e., your puzzling business credit score.

Since credibility is a vital factor in business, this score is significant in determining a company’s financial viability and trustworthiness. It is the key to unlocking new opportunities, ensuring partnerships, and establishing trust with lenders. However, understanding business credit scores and how to obtain them can often be perplexing.

Fear not! This guide will explore the mystical world of business credit scores. Once you’ve gotten your score, you will have the superhuman power to navigate the complex business landscape swiftly.

Demystifying business credit scores

A business credit score is a numerical evaluation of a firm’s creditworthiness, assessed using data from a business credit report. It includes account information, the number of company employees, payment history, and more.

This score doesn’t fall in the same numerical range as personal credit scores. Most business credit scores typically rank on a scale of 0 to 100. Meanwhile, business scores using the FICO Small Business Scoring Service (FICO SBSS) have a broader range, from 0 to 300.

Obtaining a business credit score: Behind the process 

There are two ways to get your business credit score. Either get comprehensive reports from traditional credit bureaus or get instant access to them through online credit score platforms. The latter provides detailed and quick insights when time is of the essence. Remember, timing is crucial for capitalizing on opportunities and achieving success in the business world.

Here’s how you can obtain your score quickly:

• Select a trustworthy online platform

Many online credit score platforms like Experian and Equifax specialize in providing instant business credit scores. However, look for those who are reputable and have a proven track record of accuracy and reliability. 

• Provide the required information

To generate your business credit score, provide essential details about your firm, such as its name, address, and industry. Some platforms might even ask for additional information about financial statements or tax identification numbers.

• Ensure approval for the credit check

To access your firm’s credit data, grant authorization to the platform. It will then evaluate your information from relevant sources like credit bureaus, economic institutions, and public records.

• Wait for evaluation

Once the required information is submitted, the platform will examine your company’s credit data. On assessment, it will generate an instant business credit score. This process usually takes a few minutes.

• Check the results

After evaluation, you’ll receive your business credit score with a summary of the factors that influenced it. Ensure you take the time to study it thoroughly to understand the implications for your business.

The top four ways for business credit score improvement

According to Experian, a good credit score is considered above 75 — which translates into better trade credit, lower interest rates, and access to the monetary support necessary for business sustainability, expansion, and innovation.

A high business credit score also leads to better financing options, enhanced terms with suppliers, and increased trust from partners and investors. Yet, if inadequate, it can hinder your organization’s financial endeavors, leading to losses and even business closure.

Improving your business credit score is the key to unlocking financial happiness. Currently, there is no guaranteed method of enhancing it. However, following certain practices can bolster it. Let’s explore them.

• Review your business credit report regularly: The data in your report must be accurate and timely.
• Pay your bills promptly: Your payment history is crucial to computing your score.
• Keep a healthy credit utilization ratio: Generally expressed as a percentage, it indicates the total amount of credit used. Anything lower than 30% is considered ideal.
• Have business with entities that report their trades and payments to credit bureaus: Many business creditors or vendors don’t report their trade information or payments details. Thus, ensure you work with those who do them. This will help you avoid unnecessary conflicts, strengthen your creditworthiness, and enhance your credibility in the eyes of partners and lenders alike.

Conclusion

A good business credit score is vital for developing a solid organizational foundation. It demonstrates how powerful and profitable a firm is to potential investors, partners, and clients.

Thus, indulge in good industry practices and ensure your company has an outstanding business credit score.

Want to know more? In addition to taxes, accounting, bookkeeping and CFO services through its FinOps, Escalon’s Essential Business Services include PeopleOps (HR, benefits, recruiting and payroll) and Risk (business insurance). Talk to an expert today.