Your business credit score is a key factor lenders use in order to figure out whether your application should be approved or denied. The metric can also influence the amount of credit that will be extended to your company, as well as the interest rate that will be charged. It is therefore very important that you understand this score and how it is calculated. There are a number of criteria and elements which are used to determine the number that will represent the financial trustworthiness of your business.
Information Credit Bureaus Use to Rate Your Company’s Financial Profile
Some of the bureaus lenders might check with for obtaining your business credit score include Dunn and Bradstreet, Equifax Small Business, and Corporate Experian. Experian alone uses more than 140 criteria in their scoring model, but you should know that not every bureau’s scoring model is the same. Instead, each of these companies may display your business in a different way, but what information do they use to determine what the score will be? Just like with consumer credit, the rating for a company is a reflection of things like debt payment trends and history, number of open accounts, diversity of credit account types, credit utilization and many other factors. In short, the score demonstrates how well those responsible for handling the company’s finances have been.
What Information Can Be Found On A Business Credit Report?
Much more can be found out by reviewing a business credit score than just the number that serves as the overall rating. For example, the report also contains basic demographic information, such as which industrial classification codes the company falls under, like the SIC or NAICS codes, as well as how many years the company has been on file. This demographic info is not just there for the sake of reference, but can have an impact on the score, as some industries tend to be riskier than others. Also found and potentially having an influence on rating are details such as the number of credit inquiries, recent public record filings, and diversity of credit account types.
Your business credit score is something very important for you to understand and monitor, as this rating often has a big impact on your potential lenders’ and creditors’ decision about your application with them. There are many different types of data bureaus use to calculate what your company’s credit score will be, and even which industry you are in can impact it. One of the most effective ways to ensure you get approved is to focus on improving this score.