Any business owner that knows that their onions have a good business credit score! It is essential to maintain a credible business score, especially when you are new in the industry. Small business owners who are just getting their foot into the door need all the cash they can get to handle business expenses like inventory, equipment, and advertising costs.
And because you may likely not have sufficient cash or money to dispense your business needs, taking loans from lenders is your next best option. And for this, you will need an impeccable business credit score to secure loans, leases and maximize negotiations to your benefit.
What Constitutes a Good Business Credit Score?
The majority of business credit scores range from 0-100; however, the scoring model varies from one business credit bureau to another. Let’s take a look at some common business credit agencies and their scoring standards.
Experian
Experian’s good business credit score ranges between 76-100, which translates to a low credit risk score. Per contra, a high-risk credit score is pegged at 1-10. If your business falls within this range, it is considered poor and precarious, which means you’d have to get the ball rolling and improve the scales. You can learn more about this scoring standard on the Biz Op website.
Equifax
Equifax has a distinct scoring model that is different from other bureaus. As opposed to offering a single standard score, Equifax assigns three credit scores to businesses.
These scores capture the areas below:
- Traditional Credit Risk Score: This provides a detailed overview of your business’s credit history. Scores range from 100 to 992.
- Payment Index: This focuses on and highlights your payment record. Scores in this range are from 0 to 100. A stellar score means you barely default on bill payments, and you portray responsible financial management. In this case, your score will tilt towards 100.
- Business Failure Score: This is the final score in the Equifax scoring model. It measures your business’s potential to dissolve or go bankrupt based on a score range between 1000 to 1000.
Dun & Bradstreet PAYDEX
A PAYDEX score ranges from 0 to 100. A score between 80 to 100 is equal to a good business credit score. On the flip side of the coin, a score between 0 to 49 reflects negatively on your business’s credit record. That means you have to turn over a new lead and start making on-time payments to up your rating.
FICO SBSS
FICO SBSS’ business credit score ranges from 0 to 300. With FICO SBSS, the higher your score, the better your chances of securing financial aid for your business. Generally, it would be best if you aimed for a minimum score of 160.
Having a Good Business Credit Score is a Priority
Whether your business is new or established, it is crucial to have a good business credit rating. It is your conduit to financial strength and business development. When you are cash strapped or at a loss, you can easily qualify for a loan, provided your credit score is great.
In addition, lenders and suppliers might give you better loan terms than when your rating is poor. Ultimately, it is a good business opportunity.
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