Ultimate Guide to Improving Your Business Credit Score

What Are Excellent, Good and Poor Business Credit Scores?

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Understanding what constitutes excellent, good, and poor business credit scores is crucial for any small business owner aiming to improve their financial standing. Unlike personal credit scores, which typically follow a standardized range, business credit scores can vary depending on the credit bureau and scoring model used. This diversity in scoring systems can sometimes lead to confusion, but grasping the basics of each major scoring model will empower you to better interpret and manage your business’s creditworthiness. In this section, we’ll break down the scoring ranges for four primary business credit scores: the Dun & Bradstreet PAYDEX Score, Experian Intelliscore Plus, Equifax Business Credit Risk Score, and the FICO SBSS (Small Business Scoring Service). By familiarizing yourself with these ranges, you’ll gain a clearer picture of where your business stands and what targets to aim for as you work on improving your credit profile.

Dun & Bradstreet PAYDEX Score

Understanding what constitutes excellent, good, and poor business credit scores is crucial for small business owners. Let’s start by examining the Dun & Bradstreet PAYDEX Score, one of the most widely used business credit scoring systems.

The Dun & Bradstreet PAYDEX Score ranges from 0 to 100, with higher scores indicating better creditworthiness. This score primarily reflects how promptly a business pays its bills. Here’s a breakdown of the score ranges:

Excellent (80-100): Businesses in this range consistently pay their bills before the due date. A score of 80 indicates payments are made on time, while a perfect score of 100 means bills are paid 30 days ahead of schedule. Companies with excellent PAYDEX scores are viewed as highly reliable and low-risk by creditors and suppliers.

Good (50-79): This range suggests that a business generally pays its bills on time or close to the due date. While not as impressive as the excellent range, a good score still indicates responsible financial management and reliability.

Fair (30-49): Scores in this range imply that the business occasionally pays bills late, but not severely so. This might raise some concerns for potential creditors but doesn’t necessarily indicate severe financial distress.

Poor (1-29): A score in this range suggests frequent late payments or other significant credit issues. Businesses with poor PAYDEX scores may find it challenging to secure favorable credit terms or may face higher interest rates when borrowing.

It’s important to note that the PAYDEX score is dynamic and can change relatively quickly based on recent payment behavior. This means that with consistent, timely payments, a business can improve its score over time.

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Key Takeaways

The Dun & Bradstreet PAYDEX Score ranges from 0 to 100.
Higher scores indicate better creditworthiness and more timely payments.
Scores of 80 and above are considered excellent.
Scores below 50 may raise concerns for potential creditors.
The score is based primarily on payment history with suppliers and vendors.

Tips

Aim to pay bills early whenever possible to achieve the highest possible score.
Consistently pay on or before the due date to maintain a good score.
If you’re in the fair or poor range, focus on improving payment timeliness to boost your score.
Regularly monitor your PAYDEX score to track improvements and address any unexpected changes.
Establish trade credit relationships with suppliers who report to Dun & Bradstreet to build your payment history.

Experian Intelliscore Plus

Understanding the Experian Intelliscore Plus is crucial for small business owners aiming to improve their credit standing. This score, ranging from 1 to 100, provides a comprehensive assessment of your business’s creditworthiness.

Excellent scores for the Experian Intelliscore Plus fall between 76 and 100. Businesses in this range are considered low-risk and are likely to have a strong track record of timely payments and responsible credit management. These top-tier scores open doors to the most favorable lending terms and highest credit limits.

Good scores typically range from 51 to 75. While not at the pinnacle, businesses in this bracket still demonstrate solid creditworthiness. They may qualify for decent loan terms and credit offers, though perhaps not as advantageous as those with excellent scores.

Fair scores lie between 26 and 50. Businesses in this range may face some challenges when seeking credit. Lenders might view them as moderate risk, potentially leading to higher interest rates or stricter terms.

Poor scores fall from 1 to 25. These low scores indicate a high credit risk, often resulting from a history of late payments, high credit utilization, or other negative factors. Businesses in this range may struggle to obtain credit or face very unfavorable terms if approved.

It’s important to note that Experian considers various factors when calculating this score, including payment history, credit utilization, company size, and time in business. Regularly monitoring your score and understanding these factors can help you take targeted actions to improve it over time.

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Key Takeaways

Experian Intelliscore Plus ranges from 1 to 100
Scores above 76 are considered excellent
Good scores fall between 51 and 75
Fair scores range from 26 to 50
Scores below 25 are considered poor

Tips

Aim for a score above 76 for the best credit opportunities
Regularly check your Intelliscore Plus to track improvements
Focus on timely payments to boost your score
Keep credit utilization low to maintain a good score
Address any issues promptly to prevent score decline

Equifax Business Credit Risk Score

The Equifax Business Credit Risk Score is another important metric used to evaluate the creditworthiness of a business. This score ranges from 101 to 992, with higher scores indicating lower risk. Understanding where your business falls on this scale can help you gauge your financial health and identify areas for improvement.

Excellent scores typically fall between 892 and 992. Businesses in this range are considered to have a very low risk of severe delinquency or business failure. They often enjoy the best credit terms and highest approval rates for loans and credit lines.

Good scores generally range from 762 to 891. While not at the top tier, businesses with these scores are still viewed favorably by lenders and suppliers. They may qualify for competitive rates and terms, though perhaps not as favorable as those with excellent scores.

Fair scores typically fall between 601 and 761. Businesses in this range may face some challenges when applying for credit. They might receive less favorable terms or may need to provide additional documentation to secure loans or lines of credit.

Poor scores are usually those below 600. Businesses with scores in this range are considered high-risk by most lenders and may struggle to obtain credit. If approved, they often face higher interest rates and less favorable terms.

It’s important to note that Equifax also provides a separate Payment Index, which ranges from 0 to 100. This index specifically measures a business’s payment performance, with higher scores indicating better payment history.

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Key Takeaways

Equifax Business Credit Risk Scores range from 101 to 992
Higher scores indicate lower risk and better creditworthiness
Scores above 892 are considered excellent
Scores below 600 are generally viewed as poor
The Payment Index is a separate metric focusing on payment history

Tips

Regularly monitor your Equifax Business Credit Risk Score
Focus on timely payments to improve both your risk score and Payment Index
If your score is low, identify areas for improvement and create an action plan
Consider seeking professional advice if you’re struggling to improve your score
Remember that improving your score takes time – be patient and consistent in your efforts

FICO SBSS (Small Business Scoring Service)

The FICO SBSS (Small Business Scoring Service) score is a critical metric for small business owners seeking financing. This score ranges from 0 to 300, with higher numbers indicating better creditworthiness. Unlike other business credit scores, the FICO SBSS incorporates both personal and business credit data, making it a comprehensive measure of a business’s financial health.

For the FICO SBSS, the score breakdown typically looks like this:

Excellent: 180-300
Good: 160-179
Fair: 140-159
Poor: Below 140

Many lenders, including those participating in the Small Business Administration (SBA) loan program, use the FICO SBSS as a key factor in their decision-making process. In fact, the SBA often requires a minimum SBSS score of 140 to prequalify for their 7(a) loan program, which is their most popular offering.

An excellent SBSS score (180 or above) can significantly improve your chances of loan approval and may lead to more favorable terms, such as lower interest rates or higher credit limits. On the other hand, a poor score (below 140) might result in loan denials or less favorable terms if approved.

It’s important to note that while the FICO SBSS is influential, it’s not the only factor lenders consider. They also look at other aspects of your business, such as revenue, time in business, and industry risk.

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Key Takeaways

FICO SBSS scores range from 0 to 300
A score of 180 or above is considered excellent
Many lenders require a minimum score of 140 for loan consideration
The SBSS score incorporates both personal and business credit data

Tips

Regularly monitor your FICO SBSS score
Focus on improving both personal and business credit to boost your SBSS score
Aim for a score of at least 160 to increase your chances of loan approval
Remember that the SBSS score is just one part of your overall financial picture

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