The Complete Guide to Business Credit Scores and How They're Calculated

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⏱️ 7 min read

Understanding business credit scores is crucial for building and maintaining strong business credit. Unlike personal credit scores, business credit scores vary significantly between bureaus and are calculated using different factors. This comprehensive guide will help you understand how business credit scores work and how to improve them.

Business Credit Scores Understanding business credit scores is essential for building strong business credit

Understanding Business Credit Scores

What Are Business Credit Scores?

Business credit scores are numerical ratings that predict how likely a business is to pay its bills on time. They typically range from 0-100 (D&B) or 0-1000 (some other systems) and are used by lenders, suppliers, and other creditors to assess creditworthiness. These scores help financial institutions make informed decisions about extending credit, setting terms, and determining interest rates.

Key Differences from Personal Credit Scores

Business credit scores operate differently from personal credit scores in several important ways. Business credit scores typically range from 0-100, are based on business payment history rather than personal financial behavior, are tied to your EIN rather than your SSN, operate completely separate from personal credit, and can be shared among business partners. The Federal Trade Commission (FTC) provides detailed information about the differences between personal and business credit.

Personal credit scores, in contrast, range from 300-850, are based on personal payment history, are tied to your SSN, remain an individual responsibility, and cannot be shared with others. This separation is crucial because it allows businesses to build credit independently of the business owner’s personal financial situation.

Major Business Credit Scoring Systems

1. Dun & Bradstreet PAYDEX Score

Range: 0-100 Best Score: 80-100 Calculation Method: Based on payment history and timeliness

Score Ranges:

  • 80-100: Excellent (payments made early or on time)
  • 70-79: Good (payments made within 30 days of due date)
  • 50-69: Fair (payments made 30-60 days late)
  • 0-49: Poor (payments made 60+ days late)

Key Factors:

  • Payment timeliness (most important)
  • Number of trade references
  • Payment consistency
  • Credit utilization

2. Experian Intelliscore Plus

Range: 0-100 Best Score: 76-100 Calculation Method: Comprehensive risk assessment

Score Ranges:

  • 76-100: Low risk
  • 51-75: Medium-low risk
  • 26-50: Medium risk
  • 1-25: High risk

Key Factors:

  • Payment history
  • Credit utilization
  • Public records
  • Business information
  • Industry risk

3. Equifax Business Credit Risk Score

Range: 0-100 Best Score: 90-100 Calculation Method: Risk-based scoring

Score Ranges:

  • 90-100: Excellent
  • 80-89: Good
  • 70-79: Fair
  • 0-69: Poor

Key Factors:

  • Payment history
  • Credit utilization
  • Public records
  • Business age
  • Industry factors

How Business Credit Scores Are Calculated

Payment History (40-50% of score)

What It Includes:

  • Timeliness of payments
  • Consistency of payments
  • Number of on-time payments
  • Payment patterns over time

How to Improve:

  • Pay all bills on time or early
  • Establish consistent payment patterns
  • Use automatic payments when possible
  • Monitor payment due dates

Credit Utilization (20-30% of score)

What It Includes:

  • Percentage of credit used
  • Available credit vs. used credit
  • Credit limit management
  • Credit line usage patterns

How to Improve:

  • Keep utilization below 30%
  • Pay down high balances
  • Request credit limit increases
  • Use credit strategically

Credit History Length (10-20% of score)

What It Includes:

  • Age of oldest credit account
  • Average age of credit accounts
  • Time since first credit account
  • Credit account longevity

How to Improve:

  • Start building credit early
  • Keep old accounts open
  • Maintain accounts over time
  • Avoid closing old accounts

Public Records (10-20% of score)

What It Includes:

  • Bankruptcies
  • Tax liens
  • Judgments
  • UCC filings
  • Other public records

How to Improve:

  • Avoid bankruptcies and liens
  • Resolve any legal issues quickly
  • Maintain clean business records
  • Monitor public records regularly

Business Information (5-10% of score)

What It Includes:

  • Business age
  • Industry type
  • Business size
  • Financial stability
  • Business registration

How to Improve:

  • Maintain consistent business information
  • Keep business records up to date
  • Ensure accurate business registration
  • Monitor business information accuracy

Factors That Don’t Affect Business Credit Scores

Personal Credit Factors

  • Personal credit score
  • Personal payment history
  • Personal credit utilization
  • Personal credit history length

Business Factors Not Included

  • Business revenue (directly)
  • Business profitability
  • Business assets
  • Business cash flow

External Factors

  • Economic conditions
  • Industry trends
  • Market conditions
  • Seasonal factors

How to Check Your Business Credit Scores

Dun & Bradstreet (D&B)

Free Options:

  • Basic D-U-N-S number lookup
  • Limited credit report access
  • Annual free report

Paid Options:

  • CreditBuilder: $39-99/month
  • Full credit reports
  • Score monitoring
  • Trade reference management

Experian Business

Free Options:

  • Basic business profile
  • Limited credit report access
  • Annual free report

Paid Options:

  • Business Credit Advantage: $39-99/month
  • Full credit reports
  • Score monitoring
  • Risk assessment tools

Equifax Business

Free Options:

  • Basic business profile
  • Limited credit report access
  • Annual free report

Paid Options:

  • Business Credit Monitor: $39-99/month
  • Full credit reports
  • Score monitoring
  • Risk assessment tools

Strategies to Improve Business Credit Scores

1. Establish Trade References

What Are Trade References:

  • Suppliers who report payment history
  • Vendors with credit accounts
  • Service providers with payment terms
  • Any business that extends credit

How to Establish:

  • Apply for vendor credit accounts
  • Use credit for business purchases
  • Make payments on time
  • Request reporting to credit bureaus

2. Maintain Payment History

Best Practices:

  • Pay all bills on time or early
  • Set up automatic payments
  • Monitor payment due dates
  • Keep payment records

Payment Timing:

  • Early payments (best for PAYDEX)
  • On-time payments (good for all scores)
  • Late payments (hurts all scores)
  • Missed payments (very damaging)

3. Manage Credit Utilization

Optimal Utilization:

  • Keep total utilization below 30%
  • Pay down high balances
  • Request credit limit increases
  • Use credit strategically

Utilization Calculation:

  • Total credit used ÷ Total credit available
  • Example: $3,000 used ÷ $10,000 available = 30%

4. Build Credit History

Long-term Strategy:

  • Start building credit early
  • Keep accounts open
  • Maintain consistent usage
  • Avoid closing old accounts

Credit Mix:

  • Revolving credit (credit cards)
  • Installment credit (loans)
  • Trade credit (vendor accounts)
  • Service credit (utilities, etc.)

5. Monitor and Maintain

Regular Monitoring:

  • Check credit reports monthly
  • Dispute errors immediately
  • Track score changes
  • Monitor credit building progress

Ongoing Maintenance:

  • Keep business information current
  • Maintain consistent payment patterns
  • Use credit responsibly
  • Plan for long-term credit building

Common Credit Score Mistakes

1. Not Establishing Trade References

  • Apply for vendor credit accounts
  • Use credit for business purchases
  • Make payments on time
  • Request reporting to bureaus

2. High Credit Utilization

  • Keep utilization below 30%
  • Pay down high balances
  • Request credit limit increases
  • Use credit strategically

3. Inconsistent Payment History

  • Pay all bills on time
  • Set up automatic payments
  • Monitor payment due dates
  • Keep payment records

4. Not Monitoring Credit Reports

  • Check reports regularly
  • Dispute errors immediately
  • Track score changes
  • Monitor credit building progress

5. Mixing Personal and Business Credit

  • Keep personal and business credit separate
  • Use business credit for business expenses
  • Use personal credit for personal expenses
  • Maintain separate credit profiles

The Bottom Line

Understanding business credit scores is essential for building and maintaining strong business credit. The key is to focus on the factors that matter most: payment history, credit utilization, and credit history length.

Remember, building business credit is a long-term process that requires patience and consistency. Start early, be systematic, and monitor your progress regularly. Your business credit scores will become one of your most valuable business assets.

Ready to take your business credit to the next level? Learn how to optimize your credit strategy with our guide: “Opening Your First Business Bank Account: What Banks Look For” to maximize your credit building efforts.