How to check your business credit score
Editor's Note
It's pretty easy to stumble into — nay, hard to avoid — an advertisement from some company offering you free access to your personal credit score. These advertisements are everywhere. Plus, the federal government has mandated that you can get a free credit report from each of the three consumer credit bureaus once a year via annualcreditreport.com.
However, when it comes to business credit reports and scores, be prepared to fork out some cash. There are some free services available, but they won't necessarily give you the full picture.
You should check your business credit report for the same reasons you check your personal one: to find and fix errors (they do happen), to look for evidence of fraud and to keep an eye on what might be dragging down your business credit score.
There's another good reason to keep an eye on your business credit: It's public. This means your potential clients or suppliers could use it (for a fee) when deciding whether to do business with you.
Business credit is similar to your personal credit in that it allows potential creditors to judge what kind of credit risk your business may pose. For established firms, a higher business credit score could mean better access to loans and lines of credit, lower interest rates and cheaper insurance premiums. When you're just starting, you won't have a business credit score until you open a business credit card or secure a line of credit from a vendor that reports to the major business credit bureaus: Experian Business, Equifax Small Business and Dun & Bradstreet.
Related: 9 reasons to get a business credit card
Where to get free business credit reports
Dun & Bradstreet offers a free service called CreditSignal, which sends alerts whenever your scores or reports change. However, it doesn't give you access to the full reports themselves. Here's the fine print on the website:
CreditSignal only shows four of your Dun & Bradstreet scores for 14 days, then provides directional changes to such scores. To view additional scores and ratings or view scores and ratings following the 14-day period, we recommend that you upgrade to one of our paid credit monitoring or credit building solutions.
Credit monitoring services like Nav will give you free access to a summary of your Experian Intelliscore and Equifax reports when you sign up for a free account. The site says its free service provides business credit grades for each score, access to your personal credit score from Experian and summary reports.
Again, these are only summaries; you must pay for more tools or details related to your credit report. However, this is a great place to start if you aren't tracking your business credit.
Nav offers a Prime plan for $49.99 per month, while Experian offers a credit report starting at $39.95 per report or up to $189 per year for unlimited reports and tracking data.
Another option is Tillful. Just as there are different types of personal credit scores, there are different types of business credit scores. Tillful is free to use but is not exactly the same as the options listed above. If you apply for a loan or business credit card, the issuing bank will probably pull your data from Equifax, Experian or Dun & Bradstreet. Tillful will help you understand your business credit and will issue its own score. Still, it's important to understand that this is not the same as the scoring methods lenders are likely to use to evaluate your business.
Related: What credit score do you need for business credit cards?
What details are needed to obtain your business credit report?
No matter which service you're using to view your business credit report and check your score, you'll need to provide information about your business. This will include details like the business name, ZIP code for the business address and personal details of the business owner on file to verify your identity.
You'll likely have to complete security questions as well. These can be information about previous financial obligations or personal details. These answers confirm your identity and prove that someone isn't pretending to be you.
Related: How to identify and prevent credit card fraud
Reading your credit reports and scores
Business credit reports show some information similar to your personal credit reports, such as debts and repayments. However, business credit reports also show public records like bankruptcies and tax liens.
Here's how a typical business credit report is broken down:
- Credit: Number of trade experiences, balances outstanding, payment habits, credit utilization and trends over time
- Public records: Recency, frequency and dollar amounts associated with liens, judgments or bankruptcies
- Demographic information: Years on file, Standard Industrial Classification code and business size
Each bureau will use this data to help generate a business credit score ranging from one to 100 from Dun & Bradstreet's Paydex score or Experian's Intelliscore Plus. Equifax uses a score from 101 to 992, while FICO's Small Business Scoring Service uses a score from zero to 300. These numbers differ from personal FICO scores, which range from 300 to 850.
The closer your business' credit score is to the top of the range, the better. On the D&B and Experian scales, 80 out of 100 is considered a good score.
Related: Here's why I applied for business and personal credit cards on the same day
How to improve your business credit score
If you see your business credit score and come away unimpressed, there are ways to improve it. You'll have to follow similar strategies as you would when looking to improve your personal credit score.
As with your personal credit score, you can improve your business score by decreasing your credit utilization — paying off balances, opening new lines of credit or asking for a larger credit line — and, of course, continuing to pay your bills on time, if not early.
According to Experian, negative marks on your business report may remain in place for some time. Here are the estimated lengths of time you have until they fall off the report:
- Bankruptcies: Nine years and nine months
- Judgments: Six years and nine months
- Tax liens: Six years and nine months
- Collections: Six years and nine months
- Uniform Commercial Code filings: Five years
- Bank, government and leasing data: 36 months
- Trade data: 36 months
If you have business credit cards and pay them on time, you can earn rewards while building your credit history and improving your business' credit score.
Related: 10 considerations for your small-business credit card strategy
Mind your personal credit score
While opening a business credit card can be an important way to separate your personal and business expenses, your personal credit isn't immune from taking hits because of your business activity. Some issuers report business card activity to both personal and business credit bureaus.
Plus, all major credit issuers will check your personal credit when deciding on your business credit card application. This could cause a small temporary drop in your personal credit score related to this hard pull. These are some factors to keep in mind when you're considering opening a business credit card.
However, you'll have little to worry about — concerning either your personal or business credit score — if you consistently pay your card bills on time and try to stay well below your credit limit.
Related: Small business credit card vs. corporate credit card: Which is right for your business?
Bottom line
Keeping track of your business credit can help you ensure you have access to the best interest rates and loan options available to a business of your size and longevity. It's an important way to keep tabs on how others see your business — and how you see it.
However, tracking this information requires jumping through a few more hoops than you'll encounter while exploring your personal credit. That doesn't make the effort any less important, though.
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