How is Business Credit Score Calculated?

Bank loans, credit cards, and lines of credit can bolster your working capital, giving you resources to purchase inventory or expand operations. Your company’s credit score affects the cost of these debts and how much you can borrow.

Knowing how your business credit score is calculated can be vital for building and improving your firm’s borrowing power. Improving your credit scores can help your company save money and unlock corporate growth opportunities.

Reporting Agencies That Calculate Your Business Credit Score

Four leading companies, Dun & Bradstreet (D&B), Equifax, Experian, and Fair Isaac, produce the primary scoring models used by most major lenders. Each agency verifies and collects information in a slightly different way utilizing specific factors including: 

  • Credit account age
  • Debt usage
  • Payment history
  • Company size
  • Industry risk

The reporting agencies derive their payment information from sources including:

  • Banks
  • Vendors
  • Data-gathering trade associations
  • Business credit card issuers 

That data is then verified through third-party sources; however, they sometimes make mistakes. You can generally remedy these errors by writing the agencies and offering evidence demonstrating that the information is inaccurate.

Your Dun & Bradstreet Credit Score

Dun & Bradstreet uses a dollar-weighted metric called a Paydex Score to measure a company’s payment history. Dollar-weighted means that larger accounts may have more impact on your score. 

Paydex scores range from 1 to 100, and businesses with scores of 80 and higher are considered low risk. Higher scores can help elevate company credibility to creditors. 

The Paydex Score measures how promptly your business pays its vendors, banks, customers, and suppliers using a source D&B termed a Trade Reference. A Trade Reference reports past payment experiences. 

D&B can then use Trade Reference payment history to calculate your Paydex Score.

To improve your Paydex Score: 

  • Ensure your lenders and suppliers are reporting your payments to D&B.
  • Pay your bills in advance or on time.

Get your business Paydex Score by filing for a nine-digit D-U-N-S Number.

FICO Small Business Scoring Service (SBSS)

Fair Isaac (FICO) uses its SBSS to grade your firm from 0 to 300, with 300 being the highest. The score reflects your company’s creditworthiness and the likelihood it will pay back a loan.

The Small Business Association (SBA) uses the SBSS to pre-screen a portion of the loans that it backs, including its 7(a) loan program and Community Advantage loan.

FICO calculates this business credit score by taking into account:

  • Your personal credit score.
  • The credit score of up to five owners (with at least 20% ownership).
  • The age of your business.
  • Your business’s history of on-time payments.
  • Your company’s assets and revenue.

Lenders and banking institutions can modify their SBSS models, putting less weight on specific data and more on others. For example, it can put more emphasis on your personal credit profile or more on your business. 

This is helpful if you lack operational history and business credit. You may be able to achieve an acceptable FICO SBSS score based on excellent personal credit history. However, it also helps to have strong business credit. 

In addition to SBA pre-screening, the FICO SBSS is referenced by more than 7,500 loan providers nationwide to help them make lending decisions.

Your Experian Business Credit Score

The Intelliscore Plus is Experian’s business credit scoring model. The model uses a 1 to 100 percentile risk score. It is calculated using an algorithm that is statistically derived to verify your company’s risk level based on more than 800 variables.

Essential variables include:

  • Your business size.
  • How long your company’s been operational.
  • Your debt to credit ratio. 
  • Outstanding debt balances.
  • The number of times your business has borrowed money.

Experian gathers three kinds of information relevant to your company:

  • Company background data from independent sources include collection agencies, state filing offices, credit card companies, public records, marketing databases, and corporate financial information.
  • Legal filings from the state, county, and local courts.
  • Lender and supplier credit obligation information.

It then merges this data with information from other sources that include:

  • Public record information
  • Collections
  • Payee experiences with trade payments
  • Comparative data that gives context to your firm’s payment performance in context with its industry

To improve your business score, Experian suggests checking your credit profile often to make sure the information is up-to-date and reported accurately. Ensure your business connections report trades and be sure to pay your creditors on time.

Your Equifax Business Credit Score

Equifax reports three business credit scores instead of one — Payment Index, Business Credit Risk, and Business Failure Score.

Payment Index

Your Payment Index Score ranges from 0 to 100 and uses public records, small business lenders, and trade records. The agency analyzes your firm’s payment history over the previous year. 

If your company pays on time, your score will range from 90-100. If you are often past due by one to 30 days, your score will fall between 80 and 89.

Business Credit Risk

Your Business Credit Risk assesses your company size, credit history, and credit limits to determine whether you can keep up with your payments or fall behind 90 days or more. This score spans from 101 to 992, with a higher score demonstrating a lower risk. 

A 566 or higher score is regarded as acceptable; however, a zero score signals your company’s file includes a bankruptcy.

Business Failure Score

Equifax’s Business Failure Score attempts to forecast your company’s likelihood of failing in the next 12 months, either informally or formally, or through bankruptcy. Scores range from 1000 to 1880 — the higher, the better, and like the Credit Risk Score, a zero score means you have a bankruptcy on file.

The Business Failure Score accounts for the amount of available credit you use and your late payment history. 

Equifax allows you to purchase your business credit score from their website for a fee. 

Increase Your Company’s Credit Score Rating

Scoring models among the major credit reporting agencies vary. Yet, the majority of calculation methods used to score your credit include successfully making on-time payments and the amount of credit your business utilizes.

Avoid maxing out your credit lines and pay your bills on time to ensure all of your business credit scores remain as healthy as possible. Positive credit history will make it easier and less expensive to access credit when you need to bolster your bottom line.


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