What is Business Credit?
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What is Business Credit?

About 45% of small businesses didn’t know they had a business credit score. A business credit comes into play when it comes to funding for your business and is a vital factor in the process itself. So what is a business credit and what does it entail?

What is business credit?

Much like a personal credit, a business credit shows your business’s dependency with paying its vendors and suppliers. It shows lenders how your business performs along with it's ability to make payments on time. It also consists of things such as:

  • Any financials your business has taken out

  • Any accounts in collections

  • Tax liens

  • Legal judgments such as bankruptcies

  • Information on your company consisting of when the business started as well as principals involved.


How does business credit affect the application process?

Your business credit is a reflection of how your business works financially, how dependable your business is, which is basically a reflection of yourself as a business owner. If your business credit shows that you’re not paying well or has limited credit, it ultimately becomes a risk and will result in a decline.


What if I have great personal credit, but not good business credit?

Despite having great personal credit, your business credit will still have a negative effect on your application for financing. It is important you make sure both are in good standing prior to applying for a loan.


How can I find out my business credit score?

Dun and Bradstreet is a company that puts together information from your vendors and suppliers over the course of 12 months. This number is called a Paydex score which is equivalent to a business credit score. They can also help you manage and build your credit. Most lenders use Dun & Bradstreet's reports to view businesses's credit.


How can I improve my business credit?

The first step to improving your business credit is knowing where you’re starting from. Once you can see exactly where you are lacking, you can tackle to improve those first. Pay your bills on time. Utilize your credit wisely meaning don’t dig yourself into debt. Maintain good relationships with your lenders and suppliers. Most importantly, be patient. Just like building your own personal credit, it won’t improve overnight.