As a consumer, you probably have a few different sources for your free credit reports and scores (we’ve found over 150 places where you can get your scores for free). Many business credit reference agencies require you to pay to view the information they have about your business. Strong business credit scores can be key to getting your business approved for business credit and financing. If you’re a small business owner, you’ve probably considered ways to raise money to grow your business.
The information collected, analyzed, and quantified in your business credit reports is used by creditors, leaders, suppliers, and anyone else you currently do or may do business with. It can even be used by your competitors who can provide a copy of their business credit reports when they are competing for an offer. If they know that their business credit is less than stellar at the same time, it is an advantage for them to shed light on their excellent business credit scores. Scores and indices are used to predict the financial stability and reliability of a company. Creditors will want to see healthy scores and a record of good repayment habits before offering a line of credit, loan or repayment terms.
Your business credit report, like your personal credit report, outlines how your company manages its finances and financial obligations. It provides information about your creditworthiness and your ability to repay any credit extensions. The data in the report can make or break your company’s ability to raise funds. Experian, Equifax, and Dun & Bradstreet criminal records are the three credit bureaus that compile business credit reports. Just as you would look at your personal credit report to check your financial history, the same information can be reviewed for your business. This is because the moment you start a business, credit bureaus begin to develop a business credit report about your business.
However, it’s worth keeping track of your company’s credit scores, especially if you’re considering applying for a business loan in the near future. Business credit reference agencies collect information about your company’s financial history and may use it to compile an assessment of your level of risk to lenders; this serves as your business credit score. If you’re familiar with personal credit scores, you’ll recognize business credit scores as a similar concept.
If you’re a business owner, setting up business credit can help protect your personal credit, secure competitive loans, get better insurance rates, and more. While business credit scores are similar to personal credit scores, there are some key differences. Whether you like it or not, business credit scores are an important tool that most small business loan companies use to decide if you’re getting the loan you need. Typically, lenders consider both personal credit scores and business credit scores, paying attention to all of the factors discussed above. The credit department of banks provides loans to companies with strong credit scores and profiles. A favorable corporate credit report clearly shows that a company can meet its financial obligations.
Your personal credit is your personal story, dating back to the first time you took out a line of credit in some way, whether it’s your first credit card, mortgage, student loans, car payments, or something else. Your Social Security number is linked to your personal credit score and your credit transactions are compiled by the three credit bureaus, who then calculate it to determine your credit score. A good business credit score is usually at the upper end of the range for two of the three major reporting agencies. Business credit scores typically range from 1 to 100, with 100 being the best possible score. That’s different from personal credit scores, which are calculated on a scale. As with your personal credit score, lenders are more likely to approve business borrowers with a credit score in a certain range, depending on their appetite risk.
It’s important to check your business credit score regularly so you can learn more about the financial health of your business. It’s a number that many providers, lenders, and other businesses want to know so they can decide how risky it would be to work with you. It can also have an impact on the interest rates you pay on loans and lines of credit.
If you’re applying for the SBA 7 loan, you’ll need a personal credit score of 600 or better. The FICO SBSS will be a number from 1 to 300, with 140 needed for the SBA 7 loan. There aren’t many free resources available for business credit reports because credit bureaus are not required by law to provide free copies of business credit reports.
All or one of these business credit reports are used to assess a company’s payment habits and financial responsibility. Your personal credit score tracks your personal relationship with credit through your loans, credit cards, and the payments you’ve made on both. Your business credit score works the same way, except that it represents your company’s loan history. Both are calculated by credit bureaus to classify the financial health of a company or individual.