Why Your Business Credit Score Matters
You probably keep an eye on your personal credit score, but do you know your business credit score? Learn more about monitoring your business credit to keep your business strong.
Whether you need funding to expand your business, buy equipment or cover unexpected expenses, you’ll want the best possible terms when applying for a business loan. On the other side of the equation, lending institutions will use your business credit score among other factors to determine those terms.
Business credit is just as important as personal credit, yet many small-business owners aren’t using it to their advantage. According to a Fundera survey of small-business owners, nearly 90% of those polled checked their personal credit at least once a year. However, 58% don’t check their business credit score at all — and what you don’t know can hurt your business down the road.
Building Good Business Credit
Having a clear picture of your business credit profile can help you avoid blind spots and solve problems before they turn into something bigger. Building and maintaining good credit scores, as well as monitoring them regularly can help your business:
- Establish credit. Financial institutions and creditors will check your company’s credit reports before extending or increasing lines of credit. In addition, credit scores factor into the interest rates and payment terms your company receives.
- Gain clients. Your potential customers may check your business credit reports before deciding to work with you.
- Obtain insurance. Agents use company credit reports to determine policy costs when underwriting insurance for your business.
- Work with the federal government. Federal departments and other government entities will evaluate your company’s credit reports before awarding a contract.
- Collaborate with partners. Other businesses looking for strategic partnerships may review your company’s credit reports as part of their vetting process.
Check Your Business Credit Score
Before you can start checking your business credit scores, you’ll need to set up a business credit file with the following credit reporting agencies: Dun & Bradstreet®, Experian® and Equifax®. Credit reporting agencies measure business credit scores differently from personal credit scores — scores are calculated on a scale of 0 to 100.
Credit monitoring services often offer a first report for free, but you’ll eventually be asked to subscribe to receive upgraded services such as:
- More in-depth reporting
- Access to online and mobile tools
- Information on building/improving credit
- Assistance with correcting inaccuracies and disputing errors
Some experts suggest enrolling in a service and buying a single report every six months to keep on top of your company’s financial information.
Keep Your Business Strong
Monitoring the financial health of your business is a crucial step in helping it grow and prosper. When you’re ready to explore funding for your small business, we’re here to help. Learn more about the benefits of having one banking relationship for your business and personal finances with Amegy Bank.