Ultimate Guide to Business Credit Scores

What are Excellent, Good and Poor Business Credit Scores?

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Understanding the spectrum of business credit scores is crucial for small business owners aiming to maintain a healthy financial profile. Unlike personal credit scores, which typically range from 300 to 850, business credit scores use various scales depending on the reporting agency. This can make interpreting your business’s creditworthiness a bit more complex. However, grasping what constitutes an excellent, good, or poor score across different reporting agencies empowers you to set realistic goals and take informed actions to improve your business’s financial standing. Let’s break down the scoring ranges for the major business credit reporting agencies and what they mean for your company’s credit health.

Dun & Bradstreet PAYDEX Score

Understanding the Dun & Bradstreet PAYDEX Score is crucial for small business owners aiming to manage their credit effectively. This score, ranging from 1 to 100, reflects how promptly a business pays its bills. Higher scores indicate better payment performance, which can significantly impact your business’s financial opportunities.

Excellent PAYDEX Score: 80-100

A score in this range is considered excellent. It suggests that your business consistently pays bills before or on the due date. Specifically:

100: Payments are made 30 days early
90: Payments are made 20 days early
80: Payments are made on time

Good PAYDEX Score: 50-79

This range indicates good payment history, though there’s room for improvement:

70: Payments are made 15 days beyond terms
60: Payments are made 22 days beyond terms
50: Payments are made 30 days beyond terms

Poor PAYDEX Score: 1-49

Scores below 50 are considered poor and may raise red flags for potential creditors:

40: Payments are made 60 days beyond terms
30: Payments are made 90 days beyond terms
20 or lower: Payments are made 120 days or more beyond terms

It’s important to note that the PAYDEX Score is dollar-weighted, meaning that larger payments have a greater impact on your score than smaller ones. This system encourages businesses to prioritize timely payments on larger invoices to maintain or improve their score.

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Key Takeaways

The PAYDEX Score ranges from 1 to 100, with higher scores indicating better payment performance.
Scores of 80 and above are considered excellent, reflecting on-time or early payments.
Scores between 50 and 79 are good but show some late payments.
Scores below 50 are poor and may limit your business’s credit opportunities.
The score is dollar-weighted, giving more importance to larger payments.

Tips

Aim to pay all bills on time or early to achieve and maintain an excellent score.
Prioritize timely payments on larger invoices due to the dollar-weighted nature of the score.
Regularly monitor your PAYDEX Score to catch and address any issues promptly.
If your score is low, focus on improving payment timeliness, starting with your largest bills.
Consider setting up automatic payments for recurring bills to ensure timely payments.

Experian Intelliscore Plus

The Experian Intelliscore Plus is a sophisticated business credit scoring model that ranges from 1 to 100, with higher scores indicating lower risk. This score provides a comprehensive assessment of a business’s creditworthiness, taking into account various factors such as payment history, credit utilization, and public records.

Excellent Scores: 76-100

Businesses with scores in this range are considered to have exceptional creditworthiness. They typically have a long history of on-time payments, low credit utilization, and a strong financial foundation. These scores suggest a very low risk of late payments or default, making these businesses highly attractive to lenders and suppliers.

Good Scores: 51-75

Scores in this range indicate good credit health. While not as stellar as the top tier, businesses with these scores are still viewed favorably. They may have a few minor blemishes on their credit report but generally demonstrate responsible credit management. Lenders often offer competitive terms to businesses in this category.

Fair Scores: 26-50

This range suggests moderate risk. Businesses here may have had some past issues with late payments or higher credit utilization. While not alarming, these scores indicate there’s room for improvement. Lenders may offer credit but with less favorable terms compared to higher-scoring businesses.

Poor Scores: 1-25

Scores in this range signal high risk. These businesses may have significant credit issues, such as frequent late payments, maxed-out credit lines, or negative public records. Obtaining credit can be challenging and often comes with high interest rates and strict terms, if approved at all.

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Key Takeaways

Experian Intelliscore Plus ranges from 1 to 100, with higher scores indicating lower risk.
Scores above 75 are considered excellent, while those below 25 are poor.
The score takes into account various factors, including payment history and credit utilization.
Higher scores can lead to better lending terms and business opportunities.

Tips

Regularly monitor your Intelliscore Plus to track your business’s credit health.
Focus on consistent, on-time payments to vendors and creditors to improve your score.
Keep your credit utilization low, ideally below 30% of your available credit.
Address any errors on your credit report promptly by contacting Experian.
Consider working with a credit professional if you need help improving a low score.

Equifax Business Credit Risk Score

The Equifax Business Credit Risk Score is a vital metric in assessing the financial health and creditworthiness of your business. This score ranges from 101 to 992, with higher scores indicating lower risk. Understanding where your business stands on this scale can provide valuable insights into how lenders and potential partners view your company’s financial stability.

Excellent scores for the Equifax Business Credit Risk Score typically fall between 892 and 992. Businesses in this range are considered to have a very low risk of severe delinquency or business failure. These top-tier scores often result in the most favorable lending terms, including lower interest rates and higher credit limits.

Good scores generally range from 763 to 891. While not at the pinnacle, businesses in this category still demonstrate strong financial management and a relatively low risk of default. Companies with these scores can usually secure decent financing options, though they may not receive the absolute best terms available.

Scores between 564 and 762 are considered fair. Businesses in this range may face some challenges when seeking credit, as they present a moderate risk to lenders. While financing options are still available, terms may be less favorable, and interest rates could be higher.

Poor scores fall below 564. These scores indicate a higher risk of severe delinquency or business failure. Companies in this category often struggle to secure traditional financing and may need to explore alternative funding sources or focus on improving their credit profile before seeking loans or credit lines.

It’s important to note that Equifax also provides an additional score called the Business Failure Score, which predicts the likelihood of a business closing within the next 12 months. This score ranges from 1,000 to 1,880, with higher scores indicating a lower risk of business failure.

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Key Takeaways

Equifax Business Credit Risk Scores range from 101 to 992.
Scores above 892 are considered excellent, indicating very low risk.
Good scores fall between 763 and 891, still demonstrating strong financial management.
Fair scores range from 564 to 762, presenting moderate risk to lenders.
Scores below 564 are considered poor and may significantly limit financing options.

Tips

Regularly monitor your Equifax Business Credit Risk Score to understand your company’s financial standing.
Focus on timely payments and responsible credit use to improve or maintain a good score.
If your score is lower than desired, identify areas for improvement and create a plan to address them.
Consider seeking professional advice if you’re struggling to improve your score.
Remember that the Business Failure Score is a separate metric that lenders may also consider when evaluating your business.

FICO SBSS (Small Business Scoring Service)

The FICO Small Business Scoring Service (SBSS) is a unique credit scoring model specifically designed for small businesses. Unlike other business credit scores, the FICO SBSS incorporates both personal and business credit data to provide a comprehensive assessment of a small business’s creditworthiness.

The FICO SBSS score ranges from 0 to 300, with higher scores indicating lower credit risk. Here’s a breakdown of what different score ranges typically mean:

Excellent (240-300): Businesses in this range are considered to have exceptional creditworthiness. They likely have a strong payment history, low credit utilization, and a well-established credit profile. These businesses often qualify for the best financing terms and highest credit limits.

Good (180-239): Scores in this range indicate a solid credit profile. While not at the top tier, businesses here are still viewed favorably by lenders and may qualify for competitive financing options.

Fair (140-179): This range suggests an average credit risk. Businesses may face some challenges in securing financing or may receive less favorable terms compared to those with higher scores.

Poor (0-139): Scores in this range indicate significant credit risk. Businesses may struggle to obtain traditional financing and might need to explore alternative funding options or focus on improving their credit profile before seeking loans.

It’s important to note that many lenders, including the Small Business Administration (SBA), use the FICO SBSS score in their lending decisions. The SBA, for instance, often requires a minimum SBSS score of 140 for its 7(a) loan program, though individual lenders may set higher thresholds.

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Key Takeaways

FICO SBSS scores range from 0 to 300, with higher scores indicating lower credit risk.
The score combines both personal and business credit data.
Many lenders, including the SBA, use this score in their decision-making process.
A score of 180 or above is generally considered good to excellent.

Tips

Monitor your FICO SBSS score regularly to understand your business’s credit standing.
Work on improving both your personal and business credit profiles to boost your SBSS score.
Aim for a score of at least 140 to meet minimum SBA requirements, but strive for 180+ for better loan terms.
Consider consulting with a financial advisor to develop strategies for improving your FICO SBSS score.

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