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What is a Good Small Business Credit Score? Get the Little-Known Information Right Here

Published By Janet Gershen-Siegel at December 9th, 2018

The Epic Question: What is a Good Small Business Credit Score?

Does your small business have a good business credit score?

So you are currently in business, and you are striving to keep on top of your small business credit scores. Or possibly you are not, and have decided now is a good time to start. Or maybe your small business is fairly new, and this is the first time you’re doing this.

No matter what your scenario, you have most likely asked this question at least once. So are my credit ratings any good?

Let’s check out at the three commercial credit reporting agencies and solve this mystery at last.

What is a Good Small Business Credit Score? Exactly how to Effortlessly Pull and Evaluate your Small Business Credit Reports

Your smartest move as a company owner is to remain on top of your business credit reports from PAYDEX, Equifax, and Experian.

There are three big credit reporting bureaus for companies and you really ought to check all three of them on a regular basis. This is because they use moderately different measurements. So moving the needle for one can move the needle for the two others. But that is perhaps not as much.

Do not let your business credit scores slide, as you have to catch any mistakes fast as you can. As well as, you need to identify anything which is dragging your scores downward.

Then afterwards take remedial action. You can get your reports easily and stay right on top of all three scores by following a few straightforward steps.

What is a Good Small Business Credit Score? Your Business’s Experian Company Credit Score

Experian’s Credit Score report includes a company credit score plus additional data, including account histories, payment trends, and public records. Experian business credit scores run the gamut from 1 to 100.

In contrast to Dun & Bradstreet’s PAYDEX score and Equifax’s payment index, Experian takes into account various factors, and not only payment histories.

Experian Scoring Factors

The variables which go into the calculation include:

  • Lines of credit your business has an application for in the previous nine months
  • New lines of credit you’ve begun in the last six months
  • Your company’s years in business
  • Payment history in the most recent twelve months

More Experian Scoring Factors

  • Lines of credit in use in the most recent six months
  • Collections totals in the past seven years
  • Percentage of available credit in use
  • Number of payments one – 30 days late, or 31 days or more overdue
  • Number of non-net-30 lines of credit (that means the payment is due in less or greater than 30 days).

Commonly, even companies which use credit sensibly will get a medium-low risk rating. As you might expect, older businesses will have a less complex time attaining a low-risk rating.

An epic Experian score for your small business is 76-100.

Get Your Reports from Experian

Experian, one more big credit reporting company, also offers a method for receiving reports sent to you for a cost. Hence you can follow your Experian company credit score here and the setup is easy.

However, if you prefer to not get ongoing reports (and purchase them), then you can order an individual Experian report for your company on their website.

Also, if there are any problems or mistakes, you can contest any errors on your small business’s Experian report if you follow the instructions on their web site. Learn more about evaluating your Experian report by reviewing a sample Experian small business credit report.

What is a Good Small Business Credit Score? Your Small Business’s PAYDEX Score

Dun & Bradstreet’s PAYDEX score runs from 0 to 100. A PAYDEX score has a basis in payment records which is on report to the agency. Or it is on report to data-gathering companies partnering with the credit reporting agency.

D & B uses this data, along with a credit score and financial stress score, to advise how much credit a lender ought to extend to your company.

Getting a PAYDEX Score

To get a PAYDEX number, you must file for a DUNS number by means of Dun & Bradstreet’s website. The number is free of charge. In addition the bureau needs to have records of your payments with four or more merchants.

Your business’s PAYDEX score indicates if your payments are normally made promptly or ahead of schedule. As you may expect, a higher number is better.

PAYDEX Score Details

The scores work out as follows:

  • 80-100: A low risk of late payments
  • 50-79: A medium risk of late payments
  • 49: A high risk of late payments

Business Credit Score

Your small business’s credit rating ranges from 1 to 5. 1 is the best score. This matches your company with other companies with comparable payment histories. The number shows how often those small businesses tend to pay without delay.

This information can really help lenders to understand your business’s standing.

But it does not really demonstrate all of the payment records from your business.

Financial Stress Score

The financial stress score also ranges from 1 to 5. This score matches your small business with other companies sharing similar financial and business characteristics.

These similarities are in areas like size or amount of time in business. This score demonstrates how frequently those comparable businesses tend to pay on time. As before, 1 is the best score. This rating is a more comprehensive investigation of the business landscape, versus an analysis of your business’s true payment history.

An epic PAYDEX score for your company is 80-100.

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Get Your Reports from D&B (PAYDEX)

Dun & Bradstreet’s PAYDEX score of your small business can wind up as one of the prime reasons why your company receives credit in any way. D & B offers Credit Signal, which is a method to keep track of your credit score by having the reports come directly to you, for a price.

You may discover the price is well worth it to avoid the headaches that can result from letting this score slip. And you will not need to produce and handle the schedules and reminders you might need to stay on top of if you don’t utilize it.

Alternatives to Credit Signal

Don’t wish to make use of Credit Signal? It’s no problem, as you can acquire your PAYDEX report via D & B and, if need be, you can check with their Customer Service department (this department exists as a part of Dun & Bradstreet itself).

Furthermore, in order to review your PAYDEX report, check out what D & B provides, which is a specimen report and even some higher level help in exactly how to analyze it.

What is a Good Small Business Credit Score? Your Small Business’s Equifax Score

Equifax displays three distinct business determinations on its business credit reports. These are the Equifax payment index, your business’s credit risk score, and its business failure score.

Equifax Payment Index

Similar to the PAYDEX score, Equifax’s payment index, which has its measurement on a scale of 100, shows how many of your small business’s payments were made in a timely manner. These include both information from credit issuers and vendors.

But it’s not meant to predict future activity. That is what the other two scores are for.

Equifax Credit Risk Score

Equifax’s credit risk score checks how likely it is your small business will become severely delinquent on payments. Scores run from 101 to 992, and they determine:

  • Available credit limit on revolving credit accounts, e. g. credit cards
  • Your company size
  • Proof of any non-financial transactions (e. g. merchant invoices) which are unpaid or were on charge off for two or more billing cycles
  • Length of time since the opening of the oldest financial account

Equifax Business Failure Score

Finally, Equifax’s business failure score looks at the likelihood of your business shutting down. It runs from 1,000 to 1,600, evaluating these elements:

  • Total balance to total current credit limit average utilization in the past three months
  • How much time since the opening of the earliest financial account
  • Your small business’s worst payment status on all trades in the previous 24 months.
  • Proof of any non-financial transactions (e. g. vendor invoices) which are overdue or have been on charge off for two or more billing cycles.

Equifax Scoring Analysis

For the credit risk and the business failure scores, a rating of 0 means bankruptcy.

A terrific Equifax score for your business is as follows:

  • Payment Index 0-10
  • Credit Risk score 892-992
  • Business Failure score 1400-1600

Get Your Reports from Equifax

Equifax supplies a risk monitoring service which is more convenient as it allows for reports to come directly to you. If you do not want to purchase continual reports, you can alternatively request your company’s Equifax report.

Furthermore, if you want to dispute your small business’s Equifax report, you can do so by abiding by the information on their web site.

You can learn to examine your Equifax report by looking into a sample of their reports.

What is a Good Small Business Credit Score: Takeaways

Occasionally, it pays to hand over a few dollars to ensure that you receive your company credit reports consistently. It’s a lot less troublesome than to have to always remember to do this. And you’ll probably look at these reports more carefully, as they come with a price tag.

Keep on target and use the tools that these credit reporting bureaus provide, and make your life less complex. After all; you’ve already got enough on your plate.

Because of the recent data breach, there are even more reasons to inspect your business and personal credit reports, and be vigilant about any problems you find.

Keep your scores in line and good things will happen. Learn more here and get started toward building business credit attached to your company’s EIN and not your SSN. And you’ll be able to answer the question: what is a good small business credit score.

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