A business credit score is similar to a personal credit score because it helps lenders and other stakeholders assess the risk involved in offering credit to a company. Investors and lenders can calculate creditworthiness using Dun & Bradstreet (D&B) facts, Experian's Intelliscore and Equifax's Payment Index score. 

A combination of the reports can provide a clearer picture of whether a business will repay a loan promptly. Your score can impact the amount of credit, interest rates, and whether a loan or line of credit gets approved. Investors may shy away from companies with poor ratings, fearing they will fail and take their money without any return.

What Credit Score Do You Need to Get Business Credit?

Check your business credit score by requesting a report from the three reporting agencies — D&B, Experian and Equifax. You'll start with no credit score if you recently opened your company, whether an LLC, sole proprietorship or corporation. For the reporting agencies to rank you, they must know if you make timely payments and factor in other elements, such as debt-to-revenue ratios.  

A good score can depend on other factors, and each reporting agency has its own scoring system. While the number is only one thing lending institutions consider, some rely more heavily on the figures than others.

What Should Your Credit Score Be?

Although you should track all three reporting agencies to get a handle on your business credit score, Dun and Bradstreet's straightforward scoring system benefits you as a benchmark of how healthy your company finances are.

Dun and Bradstreet Score

Most experts agree that a D&B score of between 80 and 100 is ideal. This will help you save on interest rates, qualify for loans and reduce your business insurance premiums. 

Other Business Credit Scores

For Experian and Equifax, aim for a score of 75 or greater. Some entities will also check your FICO SBSS score. For example, if you apply for a Small Business Administration (SBA) microloan, you’ll need 160 or higher for consideration. 

Talk to your preferred lender about the determining factors it uses and what range it would like to see you in for your business credit score. 

How to Improve Your Business Credit Scores

The first step to improving your business credit score is monitoring it. Experts share that 60% of Americans check their personal credit score less than once a year or never. While the number of people with business savvy is likely slightly less alarming, you should still make a concentrated effort to check your scores at least twice a year, if not more frequently. 

After you’ve studied your report, you should factor in what impacts your score. Some of the things the credit reporting agencies look at include: 

• Timely payments: A history of paying loans and invoices on time improves your credit report. One late payment may cause your score to drop by several points.
• Available credit: The ratio of your utilized credit can negatively or positively impact your score. If you have numerous loans all maxed out, your score will suffer. On the other hand, open lines of credit not being utilized can help it. Ratios play a big part in how high or low your rating goes.
• Length of accounts: The credit reporting agencies also consider the length of time accounts have been open, the age of your business and other factors, such as proven revenue models.
• Credit types: Do you have different types of credit available? A mix of open lines of credit, loans and business credit cards can make a positive impact. The scoring agencies want to see flexibility in your available finances.
• Credit inquiries: Stop applying for credit too frequently. If the reporting agencies see more than an occasional hard query, they may reduce your score. A business applying for loans and credit cards can also appear desperate for money to lenders.  

Other factors might impact your score. These include whether you are in a high-risk industry that is likely to go out of business or run into litigation, your company size, and if your brand declared bankruptcy or has tax liens and other court-ordered debts. 

Finding Financing When Your Score Is Low

What should you do if your business credit score is low and you need a loan or investors to come on board? First, take a breath and understand that your score is a number and isn’t the only factor lenders and others use to determine your creditworthiness. 

Experts acknowledge around 38% of startups fail because of cash flow issues. What can you do if you have no or low credit and need an infusion of cash? Fortunately, there are other options available, including: 

• Relying on investors who are willing to take a chance on your business model: Approach family and friends and angel investors. Be prepared to share a detailed business plan.
• Applying to multiple institutions for loans: Each creditor has their own rules for who gets money. One may turn you down based on your credit score, whereas another would say yes or offer you a higher interest rate.
• Seeking a merchant cash advance: This option seeks repayment based on future point-of-sale transactions. You can also apply for microloans through nonprofit organizations such as the Small Business Administration.
• Getting to know your local bank and credit union managers: They have the power to make exceptions when needed.
• Applying for small-business grants: Competition is fierce, but you won’t have to pay the money back if you secure one.

Maintaining a Good Score

Take steps to keep your credit score high so that when you need money, you can access it. Be sure to monitor your credit score frequently, and only apply for credit if you have no other choice. A fiscally healthy company has low debt ratios and only takes on risks when necessary to survive. Making smart money moves like this will help your business on its way to success.