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How Do Business Credit Scores Work?

Janet Gershen-Siegel
July 26, 2018
How Do Business Credit Scores Work Credit Suite

You Asked: How Do Business Credit Scores Work?

It’s a common enough question. How do business credit scores work?

So you are presently in business, and you are working hard 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 very first time you’re doing this. Whatever your situation, you’ve probably asked this question at least once – are my credit scores any good?

Let’s take a look at the three business credit reporting agencies.

Credit Reporting Bureaus

There are three major credit reporting bureaus and they all calculate your score slightly differently. While a lot of the concepts are the same, the significance put on each variable differs. This is why you at times see variations in credit scores depending upon which agency is doing the reporting. So long as there are no mistakes on the report, the scores should be similar but they are not always going to be identical.

Click to download Credit Suite’s business credit building checklist. Get our business credit building checklist and build business credit the fast and easy way.  via Credit Suite

Dun & Bradstreet (PAYDEX)

D & B makes a number of proprietary calculations to attempt to calculate if your company can settle its bills. One of these is the Financial Stress Score, which is an attempt to predict how probable it is your small business will fail in the next twelve months.

Dun & Bradstreet defines business failure as: you get legal relief from your creditors (ordinarily, that’s bankruptcy). Or you halt all of your business operations without fully paying all your creditors; or you voluntarily withdraw from your company operations and hence you leave overdue financial commitments. Another definition is that you enter into business reorganization or receivership; or you make a plan for the benefit of your creditors.

Dun & Bradstreet’s scores extend from 1,001 to 1,875. A score of 1,001 represents the highest odds while a figure of 1,875 shows the lowest chance of business failure.

The PAYDEX Score, on the other hand, serves as Dun & Bradstreet’s dollar-weighted evaluation of how your business has paid its bills during the past year. D & B bases this score on trade experiences as reported by a variety of sources. The D & B PAYDEX Score runs from 1 to 100. As you might expect, higher scores mean a better payment performance.

Your Company’s PAYDEX Score

Dun & Bradstreet’s PAYDEX score runs from 0 to 100. A PAYDEX score is based on payment data which is either reported to the bureau or is reported to data-gathering businesses partnering with the CRA. D & B uses this information, as well as a credit score and financial stress score, in order to recommend just how much credit a lender ought to extend to your business.


In order to have a PAYDEX number, you will need to file for a DUNS number via Dun & Bradstreet’s web site. The number is free. Plus the credit reporting agency must have reports of your payments with four or more merchants. Your business’s PAYDEX score reveals if your payments are typically made without delay or ahead of schedule. As you may expect, a higher number is better.


The scores break down 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

What the Scores Mean

Your company’s credit rating ranges from 1 to 5. 1 is the very best score. This matches your business with other companies with similar payment histories. The number reveals how often those small businesses tend to pay promptly. This data can really help creditors to recognize your small business’s standing. However, it does not genuinely reflect payment data from your business.

D&B’s Financial Stress Score

The financial stress score also runs from 1 to 5. This score matches your small business with other companies sharing comparable financial and business characteristics. These similarities are in areas like size or amount of time in business.

This score demonstrates how often those small businesses tend to pay on time. As before, 1 is the best score. This rating is a more comprehensive investigation of the business landscape, rather than analysis of your company’s actual payment history.

A good PAYDEX score for your small business is 80-100.



A few of the more important pieces of data Equifax considers are credit usage, public records, and how your business resolves its financial and nonfinancial accounts.

By clearing debts as fast as possible and not going delinquent, keeping your company’s credit utilization within reason (use less than 30% of your total available credit for best results), and avoiding tardy payments, you should have a good Equifax score.

Your Business’s Equifax Score

How Do Business Credit Scores Work Credit SuiteEquifax shows 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.

Much like the PAYDEX score, Equifax’s payment index, which is gauged on a scale of 100, shows how many of your business’s payments were made in time. These include both information from creditors and vendors. However, it’s not designed to predict future activity, which is what the other two scores are for.

Equifax Credit Risk Score

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

  • 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 late or were charged 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 possibility of your small business closing. It ranges from 1,000 to 1,600, appraising these factors:

  • Total balance to total current credit limit average utilization in the last three months
  • The length of time since the earliest financial account was opened
  • Your company’s worst payment status on all trades in the last 24 months
  • Confirmation of any non-financial transactions (e. g. vendor invoices) which are delinquent or have been charged off for two or more billing cycles.

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

Good Equifax Scores

A decent Equifax score for your business is as follows:

  • Payment Index 0-10.
  • Credit Risk score 892-992.
  • Business Failure score 1400-1600.
Click to download Credit Suite’s business credit building checklist. Get our business credit building checklist and build business credit the fast and easy way.  via Credit Suite


Just like Equifax and Dun & Bradstreet, Experian looks into not only just how much credit you are making use of, but also how quickly your business is working off its debts. Experian also reviews bankruptcies, and judgments or liens against your company, and any UCC filings.

Also, Experian researches any tax liens against your business. They also base some of their scoring on the length of time your business has operated and for how long your business has had an Experian listing. The longer this is, the better.

Your Small Business’s Experian Business Credit Score

Experian’s Credit Score report includes a business credit score along with additional details, including account histories, payment trends, and public records. Experian commercial credit scores run from 1 to 100. In Contrast To Dun & Bradstreet’s PAYDEX score and Equifax’s payment index, Experian considers a number of factors, and not just payment histories.

Experian Scoring Factors

The factors which go into the calculation include:

  • Lines of credit your small business has applied for in the previous nine months
  • New lines of credit open in the last six months
  • Your business’s years in business
  • Payment history in the last twelve months
  • Lines of credit in use in the last six months
  • Collections amounts within the last seven years
  • Percent of available credit in use
  • Number of payments one – 30 days late, or 31 days or more late
  • Amount of non-net-30 lines of credit (that means the payment is due in less or more than 30 days)

Experian Ratings

In most cases, even companies which use credit conscientiously will get a medium-low risk rating. As might be expected, well-established small businesses will have an easier time acquiring a low-risk rating.

A good Experian score for your small business is 76-100.

Click to download Credit Suite’s business credit building checklist. Get our business credit building checklist and build business credit the fast and easy way.  via Credit Suite

How Do Business Credit Scores Work? Takeaways

For all of the major credit reporting agencies, while the details may be weighed a little differently, the bottom line is that they are all examining how sensibly your company uses credit.

Do you pay your invoices in a timely manner or in advance, and in full? Then your score will be much better. Do you use so much credit that your small business has difficulty paying it off on schedule, and accounts go to collections? Then your score will be worse. Judgments and liens will adversely affect your score. More responsible time in business will favorably affect it.

Keep on the straight and narrow, and your business’s credit score is bound to be a good one. Learn more here and get started toward building business credit attached to your company’s EIN and not your SSN.

And you will no longer have to ask, ‘how do business credit scores work?’

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