MOST PEOPLE ARE FAMILIAR WITH PERSONAL CREDIT SCORES, WHICH RANGE FROM 300 TO 850 WITH A HIGHER SCORE INDICATING A STRONGER BORROWER. BUSINESS CREDIT, ON THE OTHER HAND, IS A SIMILAR BUT SEPARATE SYSTEM DESIGNED SPECIFICALLY FOR BUSINESS BORROWERS. BUSINESS CREDIT SCORES RANGE FROM 1 TO 100, AND MAJOR BUSINESS CREDIT REPORTING AGENCY DUN & BRADSTREET SAYS A SCORE OF 80 IS CONSIDERED GOOD ON THIS SCALE.
In the business credit system, the business’ name, address and employer identification number take the place of an individual’s Social Security number for identification purposes. Unlike a personal credit score, a business score is based almost completely on whether the business pays its bills in a timely manner.
What does a business credit score mean?
In the business world, it is common for companies to provide a good or service in advance, and invoice for payment within either 30 or 60 days. These companies report to a business reporting bureau on how long it takes to be paid for their services. The major business credit reporting bureaus are Dun & Bradstreet, Experian Business, Equifax Business and Business Credit USA.
Here is a breakdown of what the typical range of scores mean:
Under 20: The business typically pays its bills four months late or more.
50: The business typically pays its bills 30 days late or more.
70: The business typically pays its bills about 15 days late.
80 and above: The business typically pays its bills on time or earlier.
How to build business credit
Building your business credit score can be difficult, because it’s not required that other companies work with you on credit nor do they have to report it if you pay on time. There are a few other ways to increase your business credit score.
Companies can contact Dun & Bradstreet and apply for a DUNS number. DUNS stands for Data Universal Numbering System and is a unique number assigned to businesses so that the credit bureau can track them individually. The application is a straightforward process and typically can be processed in less than a week.
Additionally, a credit repair company can assist with fighting any questionable information that appears on a business’ credit report. Having negative items removed can raise a company’s score. Some credit repair companies only charge if they are successful having things removed, making them a risk-free investment to improve your score.