July 15, 2022

Decoding business credit scores and their impact


Whether you’re in the early stages of your startup or have a seasoned corporation, a good business score is crucial for gaining lines of credit to fund your business. However, building business credit is often easier said than done. It takes more than simply swiping a business credit card to have good credit. Many small business owners find it difficult to achieve and maintain business credit in the beginning stages of their business. 

There are things you can do to get your business finances under control and reach a business credit score that adds to the success of your company. 

To better understand your business credit score and how it affects your business, we’ll discuss:

What is a business credit score?

A business credit score is a credit score applied to businesses instead of individuals. This score reveals the financial health of a company. It tells lenders how much financial risk your business is and how likely you are to make payments on time. The higher your business credit score is, the easier it will be for you to get lines of credit. 

Your business credit score is accessible by potential vendors, suppliers, landlords, and anyone else looking to do business with you. If it’s low, you’ll be deemed a high-risk company一making it difficult to build relationships and grow your business. 

Business credit scores aren’t limited to larger businesses with employees. Sole proprietorships can have credit scores as well. Start by obtaining the necessary business licenses and register your “Doing Business As” (DBA) name with your state. Credit reporting agencies will retrieve this information from the state and begin tracking the credit of your business. 

Business vs personal credit scores 

Just like your personal credit score measures your creditworthiness, your business credit score measures the creditworthiness of your business. However, there are a few key differences between the two:

  • Range: A personal FICO score ranges from 300 to 850. Business credit scores usually range from 0 to 100. 
  • Employer Identification Number (EIN) vs Social security number: Personal credit scores are linked to your social security number. Business credit scores are tied to an EIN. You’ll need first to register your business to get an EIN. 
  • Standardization: Consumer credit bureaus use the FICO algorithm to determine your personal credit scores. However, business credit score algorithms vary between credit bureaus and don’t follow the same evaluation method. 
  • Rating agencies: You can get free personal credit scores once a year from each of the three major credit bureaus: TransUnion, Equifax, and Experian. Note: you’ll need to pay to see your business credit scores. You can use the three major business credit bureaus: Dun & Bradstreet, Equifax, and Experian. 
  • Privacy/access: Only you and a few other parties have access to your personal credit score. With business credit scores, all the information is public, and anyone who pays for it can get access to your information.

The main area in which business and personal credit scores differ is in their calculation. Business credit scores are calculated using multiple factors:

  • Credit information: Lenders will look into your outstanding balances, credit utilization ratio, payment habits, and your number of trade experiences.
  • Public records: Information about liens, bankruptcies, and legal filings from local, county and state courts.
  • Company background information: Business size, years on file, corporate financial information, and Standard Industrial Classification (SIC) code.

Alternatively, personal credit scores are calculated using these factors:

  • Payment history accounts: How often you make payments, the number of late payments you have, how often you miss payments 
  • Amount owed: The amount of money you owe compared to the amount of credit you have available. A maxed-out credit card will contribute to a lower score, while a lower balance with regular payments will result in a higher score.  
  • Length of credit history: Credit bureaus look at the average of your credit and your history of making regular payments
  • Types of accounts: A mix of credit, such as home loans, retail, and credit cards, can help improve your credit score
  • Credit activity: Opening several accounts at once could suggest financial problems, negatively affecting your personal credit

How to check your business credit score

So, how can you check your business credit score? There are two options for checking the financial status of your business: free and paid. 

Free Options

Dun & Bradstreet

To check your business credit score with Dun & Bradstreet, you’ll need a DUNS number. It’s free, but it can take up to 30 days to receive. Once you have it, they’ll assign you a Paydex score, a delinquency score, a business failure score, and other information about the financial health of your business. 

The Paydex score ranges from 0-100, and it evaluates payment history. The delinquency score is from 101-607 and estimates the likelihood of your business making late payments. If your score is high, it means your business is low risk. 

The business failure score ranges from 1,001-1,875 and predicts the chances of a business shutting down or declaring bankruptcy in the next 12 months. A low failure score means your business is viewed as a higher risk. 

Dun & Bradstreet’s Credit Signal package lets you check your credit score for free, but you will need to pay for additional ratings or information. 

Paid Options 


Experian offers a business credit score report package that starts at $39.95 per report. The main factors of the report are your business credit score and financial stability risk rating.

The business credit scores ranges from 1 - 100, and Experian considers your payment behavior. It also considers delinquent accounts and the number of accounts you have with payment terms beyond net-30 days.

The financial stability risk rating looks at the probability of payment defaults or bankruptcy in the next 12 months. This rating is from 1 - 5. A lower score means that your business is a low risk for potential lenders. 

Along with its standard Credit Score report, Experian offers a Business Credit Advantage package for $189 per year. You’ll get unlimited access to your financial information, additional analysis, and alerts. 


Similar to Equifax and Dun & Bradstreet, Equifax’s business credit report also includes multiple scores to assess your business. They provide a credit risk, failure risk, and payment index score. 


The credit risk score ranges from 101 - 992 and assesses the chances of delinquency or business failure. The higher your score, the less risk your business poses. Payment index scores range from 1 - 100 and evaluate payment history. The failure risk score runs from 1,000 to 1,880 and predicts the likelihood that your business will shut down in the next 12 months.

Equifax doesn’t publish its pricing on its website. You’ll need to contact them to purchase a business report for yourself or another company. 

What goes into a business credit score?

There is no standard model for calculating business credit. Each credit bureau uses a unique combination of factors to check your credit score. Here are some of the most common factors:

  • Creditworthiness: Personal and business loan history/credit history from credit reports
  • Credit types: Types of credit you have (ex. fixed loans, business credit cards) 
  • Credit capacity: Your company’s ability to repay a loan or business line of credit 
  • Public records: Filings and other reports like liens or judgments against your business
  • Recent credit applications: Recent credit applications or “hard inquiries” 
  • Company conditions: The length of time you’ve been in business

What is a good business credit score?

Business credit scores vary depending on the business credit reporting agencies. In general, a score above 75 is looked at favorably. 

To understand the business credit score spectrum, let’s look at the Dun & Bradstreet Paydex scoring system: 

  • Paydex range 80-100: A score of 100 means that all your payments go through before their due date. A score of 80 reveals your payments are on time. This is considered good credit. 
  • Paydex range 50-79: A score of 70 shows that your payments often come 15 days late. A score of 50 is given to businesses that tend to pay 30 days late. This is considered fair credit. 
  • Paydex range 0-49: Scoring 40 or less means that you make payments 60 days past the due date. This is a bad credit score. 

If you want to know what scores are considered “good,” you’ll need to know which credit bureaus your desired lenders or vendors are working with. In the meantime, here’s a brief breakdown of good business credit scores from popular reporting agencies:

  • Dun & Bradstreet: 80 - 100 
  • Experian: 76 -100 
  • FICO SBSS: 140 - 300 
  • Equifax: 75 -100 

How your credit score will affect business operations

For business owners, a good business credit score can result in increased opportunities, easier access to financing, and lower insurance rates. But what if your business score is on the lower end of the spectrum? What problems can you expect to run into?

Here’s how a bad credit score can negatively affect business operations:

  • Difficulty securing new loans: A bad business credit score makes it harder for your business to secure favorable terms on new loans.
  • Impacts vendor relationships: New vendors are usually reluctant to work with a business with bad credit. 
  • Expensive utility costs: Your bad credit could cause you to pay higher utility costs.
  • Higher interest rates: Poor business credit means higher interest rates for loans. 
  • Expensive insurance premiums: Insurance companies view low business credit scores as evidence of poor business dealings. They’ll increase your premiums to protect themselves when providing you with coverage.

6 ways a small business can improve its business credit score

At the start, you might find it hard to build business credit. A low business credit score can be discouraging if you made some financial mistakes early on. Even so, your business can still improve its finances. 

Let’s explore six ways you can increase your business credit score and prove your creditworthiness to finance providers.  

  1. Avoid closing accounts: Credit bureaus factor your business credit history into your credit score, so don’t rush to close accounts. Even if you don’t use them often, leave them open to contribute to the growth.
  2. Pay your bills on time: Working to pay your bills on time is the best thing you can do to improve your credit score. Making regular payments proves that you’re not a risk to lenders and vendors. 
  3. Pay off balances: Paying off balances works to decrease your credit utilization ratio. If you can’t pay them off completely, try getting them as low as possible. 
  4. Increase your credit limit: Increasing your credit limit lowers your credit utilization ratio, and will help improve your credit score. 
  5. Open a separate business bank account: Instead of using a personal card for business purposes, open a separate business bank account. Only use money from this account to pay off debts. 
  6. Maintain lines of trade credit: Credit extended by suppliers and vendors is crucial to financing your business. Building successful relationships with these vendors and suppliers by paying on time will help you maintain a good credit score. 

How Ramp can help startups manage their credit with finance automation 

It’s not enough for your startup to simply secure lines of credit—you need help managing and controlling spending. If you're looking for a way to build credit while saving time and money, Ramp can help.

Instead of leaving your business open to surprise charges and untracked spending, Ramp provides startups with advanced spend controls. Control spending before it happens by setting limits that are automatically enforced as employees use their cards.

Save time and money with AI-powered savings insights to find areas where you can cut back and reduce spending. Real-time expense reporting allows you to monitor company spending trends and take action to save money. Ramp ensures that business resources are used to give your business a solid foundation to grow and thrive. 

Ramp reports to the major business credit reporting agencies. Every purchase you make with Ramp’s corporate card helps you build your credit and foster good relationships with vendors and suppliers. 

Traditional credit cards encourage spending to earn points and rewards, but Ramp’s software enables you to get spending under control. 

To see how Ramp can benefit your startup, try it out for yourself with this product demo.

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What is a good credit score for small businesses?

In general, business scores run from 0 to 100. Small business lenders prefer companies to have a business credit score of 75 or higher. However, local or smaller lenders may consider businesses with a credit score of less than 75. 

Does a sole proprietorship have a credit score?

Yes, it does. If your business is registered with the state, credit reporting agencies can get this information from the state and begin tracking your business's credit. 

What is the difference between a credit score and a credit report?

A credit report is a compilation of your business credit history. This includes your past and current credit activity, lines of credit, and payment history. Your credit scores are determined based on the information in your credit report. 

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