The best way to keep of how your business credit is developing is to monitor your scores and reports yourself. In this article, we’ll take a look at four business credit monitoring services that can help you track the state of your business credit.

Business Credit Monitoring Services

In this article, we’ll take a detailed look at 4 companies that offer business credit monitoring services. Each has a variety of services/subscriptions that can help you monitor and/or build your business credit.

1. Dun & Bradstreet – Best for credit building
2. Nav – Best for free business credit monitoring
3. Experian – Best for one-time credit report/score checks
4. Tillful –  Best for business credit education

1. Dun & Bradstreet Credit Monitoring Products

Best for Credit Building

One of the biggest names in the business credit world is Dun & Bradstreet (D&B). This business credit company has existed for almost 200 years (established in 1841).

D&B offers a variety of credit monitoring products as well as products for lead generation and marketing. All of these products are subscription-based and are charged monthly or annually. There is also a limited free trial option for checking your business credit scores.

And for those looking to improve their D&B credit scores, D&B also offers two credit-building subscriptions that allow you to submit your own trade references.

Pricing

Dun & Bradstreet offers over a dozen subscription-based products that allow you to check your D&B scores and reports. Below are 4 subscription plans geared towards checking and monitoring your business credit.

If you want to save a little money on a D&B subscription, most plans offer a pay-annually option that saves you 15% – 20% off the monthly price.

In addition to the above options, D&B offers a premium version of their CreditBuilder subscription (with unlimited trade references and subscriptions tailored for sales and marketing.

2. Nav Business Credit Monitoring Products

Best for Free Business Credit Monitoring

Nav is essentially a business lending marketplace. They pair you, the small business owner, with business loans, credit cards, business banking products, and more. And as a part of this matching service, they offer free business credit scores and credit monitoring.

One of the best parts about Nav’s free service is that you get your credit scores from the 3 main business credit bureaus: D&B, Experian, and Equifax. Plus, you get your Experian and Transunion personal credit scores (Vantage) as well.

Nav also offers a paid subscription that includes identity theft protection, your FICO SBSS, and a unique Nav Tradeline reported to all 3 business credit bureaus.

Pricing

Nav offers two subscription plans for business credit monitoring; Business Basic, which is free, and Business Boost, which costs $49.99/month. Here are the key differences between the subscriptions.

If you want to save money on the Business Boost subscription, you can choose quarterly payments with 20% off your first payment.

It is worth noting that since Nav earns money through partner referrals, this could result in you receiving unwanted calls and emails.

3. Experian Business Credit Monitoring Products

Best for One-Time Bredit Report/Score Checks

Most of the business credit services Experian offers are geared toward sales and marketing instead of helping business owners track their credit.

That said, Experian offers a credit monitoring subscription that lets you monitor your business credit scores for a flat yearly price. And it includes identity monitoring.

Additionally, Experian offers one-time credit report pulls (for a fee) that can help you get a clear picture of what your business credit looks like right now.

Unlike many other resources on this list, Experian does not offer any kind of credit-building account.

Pricing

Experian’s business credit products are more geared towards one-time checks of your business credit instead of ongoing monitoring. Experian only offers one credit monitoring subscription, the Business Credit Score Advantage.

In addition to the two above-mentioned business credit check options, Experian also offers the Business Credit Score Pro, which lets you check up to 30 businesses’ credit. Other business credit check options include the purchase of international business credit reports.

4. Tillful Business Credit Monitoring App

Best for Business Credit Education

Like Nav, Tiillful is a service that matches customers (small business owners) with lending products. The main difference is that Tillful is exclusively an iOS app.

Using the Tillful app, you can view your Experian Business Intelliscore for free. This is a one-time feature, and the scoring model used is version 3. This model is not widely used outside of Tillful.

Tillful will also use your credit and banking information to generate a Tillful score to help you estimate the financial health of your business. This score is purely educational; it is not used by creditors.

In addition to the free business credit monitoring service, Tillful offers business owners a secured business credit card. This card has no annual fee, personal guarantee, hard inquiry, or APR. All you need to qualify is a Tillful account and a security deposit.

Pricing

All Tillful accounts are free. But Tillful does offer an optional credit-building secured credit card as part of its services.

In addition to helping you build credit, the Tillful secured business credit card also earns up to 1.5% cash back on purchases and does not charge any interest.

Comparing the Best Business Credit Monitoring Services

Below is a quick comparison of each individual credit monitoring subscription that these 4 companies provide. All of these subscriptions send score change alerts to you. Subscriptions previously mentioned in this article that do not provide alerts have been omitted. 

How is Business Credit Monitoring Different?

If you are used to consumer credit monitoring services (like Credit Karma), you might be a little surprised at the lack of detailed information you are provided when monitoring your business credit. This lack of information stems from the business credit bureaus themselves.

Unlike personal credit reports, most business credit reports will have limited information on tradelines and inquiries. This omission of tradeline data is done for privacy and safety reasons. This is designed to protect you and your suppliers.

Because of this limitation, many business credit monitoring services will primarily show credit scores only or very limited tradeline details. If you want more detailed credit report information, particularly if you need to dispute an error, you’ll have to contact the credit bureau directly.

Take a look at our article on how to check your business credit for more information on obtaining your information directly from the business credit bureaus.

The post 4 Best Business Credit Monitoring Services in 2024 appeared first on FinMasters.

Building business credit is important to secure business loans, credit cards, and supplier terms. If your personal credit score doesn’t make the grade, that may be difficult.

Here’s how to build business credit with bad personal credit.

Understanding Business Credit vs. Personal Credit

First things first: what’s the difference between business and personal credit?

Your personal credit score is linked to your Social Security Number and reflects your personal financial history.

Your business credit score works differently. It’s tied to your Employer Identification Number (EIN) and reflects your company’s financial history.

Despite these differences, both your business and personal credit scores will reflect your payment history, which is what lenders are primarily concerned about. Strong credit can give you better access to credit cards and loan programs and help you qualify for preferential interest rates.

Is Business Credit Tied to Personal Credit?

Your business credit remains completely separate from your personal credit history. That’s mainly because your business credit is tied to your company’s EIN, not your Social Security Number. If you own multiple businesses, you’ll have a separate credit report tied to each company.

Still, business owners often discover that their business and personal credit histories overlap in the eyes of lenders, especially if your business is a sole proprietorship or if it has a limited operating history. If your business credit record isn’t enough, your lender might ask for a personal guarantee for a business loan.

When Does a Business Loan Show Up on Your Personal Credit Report?

Since your business and personal credit reports are separate, a business loan will generally not appear on your personal credit report.

However, this doesn’t mean your personal credit history will be unaffected by a business loan.

How Does Personal Credit Impact Your Business?

Does personal credit affect business credit? Not directly, but it’s possible for low personal credit to affect your business credit in two ways.

Lenders Will Evaluate Personal Credit

If your business is relatively young, you won’t have had enough time to establish a business credit history. When you apply for credit, your lender or supplier will look into your personal credit history. If your personal credit score is low, it can be difficult to obtain business credit.

You Risk Repeating Mistakes

Your personal credit score is a reflection of your financial habits. If it’s on the low side, you have probably had some issues handling money. If you have made late payments, maxed out credit cards, or made other mistakes that harmed your personal credit, you may make the same mistakes in handling your business finances.

Your credit report and credit score tell potential creditors about your money habits, but the information in them is also important to you. If your credit isn’t good, you need to understand why and correct those mistakes before they creep into your business life.

The Importance of Separating Personal and Business Credit

One of the most common mistakes business owners make is using personal assets to cover business expenses.

In the earliest days of your business, this can feel like a natural way to fund your business, but it’s important to separate personal and business credit as soon as possible. Here’s why.

• Protect Your Personal Assets – Using your personal credit to run a business can put you at risk. If you default on a loan or your business fails, your creditors can come after your personal assets to cover what you owe.
• Simplify Your Tax Situation – Intermingling personal and business finances can cause a major headache once tax season rolls around. Keeping your personal and business finances separate will make it easier to identify business-related deductions, which can save you money in the long term.
• Look More Professional – Using a personal check to pay for inventory or equipment sends a red flag to vendors and suppliers, hinting that your business is less than legitimate. Keeping your business and personal assets separate can give your company a professional appearance and help you build brand recognition.
• Build Business Credit – Perhaps most importantly, keeping your personal and business credit separate ensures that your business will develop a financial history of its own.

The more you treat your business as a separate financial entity, the more you’ll see your business credit score grow.

Why Business Credit Matters

Even if you have a perfect personal credit score, it’s still important to build business credit. Here are a few things you can do with a strong business credit score.

1. Gain Access to Business Loans and Credit Cards

Most business owners will require some type of funding to start, maintain, or scale their enterprises. Many small businesses struggle to secure the funding they need to cover expenses.

With a strong business credit score comes access to higher loan amounts or credit limits, both of which can be invaluable when purchasing large quantities of inventory or specialized equipment. Maintaining a strong business credit score will make getting the funding you need faster and easier.

2. Negotiate Better Contracts with Suppliers

Lenders aren’t the only ones who look at your business credit score. You can leverage it to secure better repayment terms with vendors and suppliers. In some cases, vendors may look at your business credit score as they determine whether they want to enter into a contractual agreement.

A strong business credit score will make you more competitive, giving you room to negotiate the best terms when relying on suppliers to provide you with supplies or equipment. Otherwise, you may find yourself bound to the terms your vendors set, limiting your options and locking you into high interest rates.

3. Protect Your Personal Credit Score

It bears repeating that business owners should work hard to keep their personal and business data finances separate. The more you use your personal credit to cover business expenses, the more you risk damage to your credit score through hard credit inquiries or opening multiple lines of credit in a short window.

How to Build Business Credit Without Personal Guarantees

Given the importance of business credit, it’s important to learn how to build business credit with bad personal credit.

Some lenders will extend business loans on a conditional basis, requiring you to sign a personal guarantee. A personal guarantee requires you to be responsible for some or all of the business debt should you default on your loan.

Personal guarantees offer lenders protection but can endanger your personal assets and affect your debt-to-income ratio. That could make it hard to get a mortgage or car loan.

Here are some basic steps to help you build business credit without the risk of a personal guarantee.

1. Obtain an EIN

Start by ensuring that your business has an employer identification number, or EIN. This number will function as your company’s primary identification number and can be used to apply for credit cards and open business checking or savings accounts.

2. Get Your DUNS Number

Business credit reports are generated by three major business credit bureaus: Equifax, Experian, and Dun & Bradstreet.

Dun & Bradstreet won’t automatically start tracking your financial data. You’ll need to register with the bureau to obtain a DUNS number, which will ensure that your record of on-time payments contributes to your business credit score.

3. Apply for a Business Credit Card

This step can be tricky if you have poor personal credit. But even if your options are limited, it helps to obtain a business credit card since your payment history will be reported to the major business credit bureaus.

4. Apply for Vendor Trade Lines

Some vendors offer “vendor trade lines,” a specialized type of credit that companies extend to newer business owners. 

This can be a great way to start building business credit, and it doesn’t necessarily demand a strong personal credit score. Just make sure to ask whether the vendor reports on-time payments to the major business credit bureaus so you can start building business credit.

5. Apply for a Secured Business Credit Card

Wondering how to get business credit cards with bad personal credit? Consider applying for a secured business credit card. 

This requires a cash deposit that will double as your credit limit, but that’s still less risky than signing a personal guarantee. Once you build your business credit, you may qualify for an unsecured business credit card option.

6. Apply for a Working Capital Loan

Working capital loans provide an influx of cash that can be used for day-to-day expenses. These loans tend to be smaller than other forms of business financing, making them more accessible to business owners with poor personal credit. 

As long as your lender reports your payments to the major credit bureaus, you can also use your loan repayments to help build your business credit.

7. Check for Errors on Your Business Credit Report

It can take as long as a year to develop a meaningful business credit score, but make sure you monitor your business credit from the start. Not only will you know exactly where you stand, but you can also weed out errors in your report that could drag your score down. 

Report errors to the credit bureau that issued the report immediately. It can take time to erase these errors, but having them corrected will guarantee that your score is accurate.

Bottom Line: Can I Start a Business with Bad Personal Credit?

Your credit score shouldn’t keep you from launching a successful business.

The tips outlined here show you how to build business credit even if your personal credit is subpar. Taking advantage of these options can empower you to succeed in the business world and give your company a distinct credit profile.

The post How to Build Business Credit with Bad Personal Credit appeared first on FinMasters.

Good business credit is vital in getting business insurance, small business loans, and supplier payment agreements. A high score may lead to lower loan interest rates and more favorable supplier payment terms. A low score can make borrowing more difficult or even impossible.

Understanding your score is a significant step toward building your company. Here’s how business credit scores work.

What Is A Business Credit Score?

A business credit score is the measurement of a company’s creditworthiness that consists of several factors to understand a company’s financial position and level of risk.

There are multiple business credit score providers. These are some of the most common.

• The Dun & Bradstreet PAYDEX Score.
• The Experian Intelliscore Plus.
• Equifax offers a payment index score, a credit risk score, and a failure risk score.
• FICO’s Small Business Scoring Service (SBSS) score.

Why Your Company Needs a Good Business Credit Score

Business credit is just as important as personal credit. Here are some things that a good business credit score can do for you.

• Save You Money. Lenders offer better interest rates to businesses that have good credit.
• Get Business Loans Without a Personal Guarantee. This reduces your personal liability and protects your personal credit score.
• Maintain a Competitive Edge. You can transfer your interest savings to your clients through lower prices or keep a higher profit margin.
• Lower Stress and Greater Confidence. You’ll know you can get money when you need it.
• Obtain Trade Credit. A good business credit rating can help you get better repayment terms with your suppliers. This is important when you need to buy equipment and inventory.

Good business credit is essential to starting and running a business and should not be treated as an afterthought. Make it part of your business plan from the beginning.

How To Establish Business Credit

Every business has to establish credit for the first time. Here are the steps:

• Set Up Your Business Legally. The first step towards business credit is choosing the right structure. Set up your business as a sole proprietorship, partnership, or limited liability company.
• Obtain Your EIN. Your Employer Identification Number (EIN) is like a social security number for your company. It’s a company ID number that you will use to file taxes, open bank accounts, and apply for a business license.
• Set Up a Business Bank Account. Open a business bank account for your company. This is required to clearly distinguish between your professional and personal expenses. It also provides key data lenders use when reviewing financing.
• Open accounts. Using supplier credit, loans, or a business credit card will help your business establish a credit record.

As with personal credit, managing your accounts well is a key part of achieving and maintaining good business credit. Pay all bills on time and keep your business credit card balances below 30% of your credit limit.

Keep Track of Your Business Credit Reports

Checking business credit is not as simple as checking personal credit. Business credit reports are not covered by the Fair Credit Reporting Act, so you are not entitled to a free annual credit report from each provider.

There are still ways to check your business credit. Reporting agencies will provide you with a copy – though you may pay a fee – and some companies can give you free access to your business credit report and score.

You have the right to dispute erroneous entries on your business credit report. Contact the agency to make the appropriate corrections if you discover outdated or inaccurate data.

Is Business Credit Tied to Personal Credit?

While you and your business have distinct credit ratings, it can be important to maintain good personal credit if you are seeking business financing. Your personal credit history may be examined when applying for a commercial loan.

You must segregate your personal and business credit as much as possible. However, while you do your best, your personal credit can still affect your business. The impact amount depends on the specific situation.

Your lender may ask you for your social security number in addition to your EIN, especially if your business is relatively new and has not yet established an extensive credit record.

This usually means that your personal credit is under review. If you use personal property or personally guarantee a loan and have little accumulated business credit, your personal credit history will likely come into play to cover gaps.

What Factors Influence Your Business Credit Score?

As far as credit reporting agencies are concerned, there is no standard score model for assessing risk. Lenders, vendors, banks, leasing companies, businesses, and finance companies use different reports and rating models based on the credit score agency they subscribe to. 

The business credit reporting agencies compile a score based on the various reports it receives regarding your business. Some agencies consider information from the homeowner’s personal credit report and commercial organizations, such as the Small Business Financial Exchange.

1. Creditworthiness

Many of the factors that go into a business credit score are similar to those that go into a personal credit score. Payment history is one of the most important. Timely payments on debts and bills will help you build good business credit.

Business credit scores also consider the age of your business: you may get a higher score if your business has been around for a while. The percentage of the available revolving credit you are using, known as credit utilization, also determines your business credit score., Other factors include the type of industry you are in and the size of your business.

Reports from vendors, suppliers, or creditors regarding a business’s accounts and activities help determine a business’s credit rating. The business credit reporting agencies compile a score based on the various reports it receives regarding your business. Some agencies consider information from the homeowner’s personal credit report and commercial deposits, such as the Small Business Financial Exchange.

2. Credit Capacity

Creditors want to see positive cash flows, a sound banking history, a steady payment history, and cash reserves.

These may be difficult to achieve for small businesses or relatively new businesses. As with personal credit scores, you’ll need to start small and have a strategy for building better business credit.

3. Capital Invested

One of the factors that bankers use when assessing a commercial loan is how much money the owner has invested in the business.

Banks look at the company’s debt-to-equity ratio to understand the amount of money you’re asking for versus the amount of money you’ve already invested in your company. The smaller the ratio, the better.

What Business Entities Can Have Business Credit?

Every business can apply for credit. It doesn’t matter if your business is an LLC, proprietorship, or partnership. All you need to do to establish a credit score. You do not need to be a registered business or a full-time business owner to qualify; even small part-time businesses can generate sufficient revenue for a new account.

Start Early

If you’re starting a business, think about business credit from the start, and have the plan to build it. Even if you don’t need credit right away, setting up a solid structure and taking on well-chosen credit lines can set you up for the future.

It is likely to come a time when you want to expand, you want to set up payment terms with suppliers, or you need to cover a cash flow issue. When that time comes, your business credit score can be a major asset!

The post What Is a Business Credit Score and How Does It Work? appeared first on FinMasters.

Here are some strategies that you can use to improve your business credit profile.

What Is a Business Credit Score?

A business credit score measures how well your business has handled its past financial commitments. Lenders and business partners will use this score to determine the business’s eligibility for the best rates and terms on business loans and other contracts. 

Unlike your personal credit score, which ranges from 300 to 850, your business credit score can be evaluated on one of two scales: 1 to 100 and 101 to 992.

A low credit score isn’t always the result of late bill payments. For instance, it can take time for a new business to establish business credit. That’s why it’s important for business owners to monitor their business credit reports and take steps to build business credit.

Ways to Build Business Credit

There are no shortcuts when it comes to building your business credit. Still, every business owner can use the following strategies to improve their business credit profile.

1. Establish Your Business

Many entrepreneurs have experienced the awkward startup phase of owning a business. But make sure you cover all of your details. This means you should take the time to:

• Obtain a business phone number
• List your business in an online directory
• Develop a company website
• Use a consistent business address
• Create a professional email address

These steps won’t necessarily build your business credit right away, but they can give your business a greater sense of legitimacy with your clients as well as your lenders.

This step is foundational to all the others. Establishing a professional business identity early on can make it easier to secure affordable bank loans and selectively work with vendors who report to major credit bureaus.

Are you struggling to come up with a name for your business? This guide to choosing a business name will teach you how to create an appealing name for your business.

2. Open a Business Bank Account

In the early days of your business, it may be tempting to use your personal assets to cover a few business expenses. But this is unwise. It can make it more challenging to sort out your personal and business expenses during tax season. But more significantly, using your personal finances will prevent you from building your business credit profile.

Instead, open a dedicated business bank account as soon as possible. Using this account for all of your business expenses will help you build credit faster. 

Most local banks and traditional financial institutions can offer business services. For best results, select a bank that reports data to the major commercial credit bureaus.

3. Register Your Business

Business owners should expect to register their businesses with their state. This will require you to declare your legal structure. By default, your business will be classified as a sole proprietorship, but you can also structure your business as a:

• Partnership (requires one or more business partners)
• Limited liability company (LLC)
• Corporation

Each of these has advantages and challenges of its own. The U.S. Small Business Administration site can help you choose the right structure for your business.

It’s not uncommon for some organizations to conduct business under a fictitious business name. If you’re a sole proprietor, you can register a doing-business-as (DBA) business name with your state.

You’ll also need to obtain an employer identification number (EIN) from the IRS. Depending on your industry, you may be required to obtain licenses and permits to operate.

4. Apply for a DUNS Number

You can get a DUNS number online, which will identify your business with the commercial credit reporting agency Dun & Bradstreet. Your business may already have a DUNS number, but if not, you can request one for free. This ensures that your business will be monitored by a major business credit bureau, which can help you build credit.

Other credit reporting agencies — including Equifax, Experian, and Creditsafe — will have numerical identifiers of their own. You won’t have to submit a request to ensure that you’re visible to these agencies.

5. Make Purchases with a Business Credit Card

One of the fastest ways to build business credit is through a business credit card. Assuming you pay the balance on time, you’ll build credit each time you use the card. 

If you’ve already opened a business bank account, your financial institution will likely have options for a business credit card. You may even be able to benefit from reward points, cash back, or other incentives.

Just be cautious about how you use your credit card. Late payments can hurt your credit score, but so can your credit utilization ratio. This is the total of all your credit balances divided by all your credit limits. Said a different way, it’s the percentage of your monthly credit limit that you’re using. If you consistently keep your balance over 25% to 30% of your credit limit, you can harm your business credit.

To keep your credit utilization low, consider opening multiple business credit cards (though no more than two to three). This will allow you to juggle expenses between accounts, making you less likely to exceed this 25–30% threshold.

6. Keep Track of Your Monthly Bills

Nothing hurts your credit score like late payments. Sure, everyone knows how important it is to pay their bills on time, but first-time entrepreneurs can quickly become overwhelmed by the sheer number of professional responsibilities, allowing certain expenses to slip through the cracks. Even a payment made a day or two late can reduce your credit score.

Set aside a day on the calendar on which you pay all of your bills at once. Ideally, aim for a day at least a week before the final deadline, which can give you a buffer if you need to send physical checks through the mail.

You can also speed up the process by setting up automatic payments with your business bank account. This ensures that you’ll always make your recurring payments and avoid late fees and dings on your business credit score. But make sure that you account for these payments, or you could overdraft and face other penalties.

7. Rely on Suppliers that Report to Major Business Credit Bureaus

Whenever possible, work with suppliers, vendors, and financial institutions who report to the major credit bureaus. By doing so, you’ll have a better chance that your timely bill payments will be recorded on your credit report, which can contribute to good business credit.

Keep in mind that not every vendor or bank will report directly to these institutions. If you’re looking to build business credit, you may want to select business relationships that align with this goal. 

When in doubt, ask your vendor or bank if they report to a commercial credit bureau. and which one. Try to aim for at least two to three vendor and business accounts that directly connect to a major credit reporting agency.

8. Use a Business Loan

Using small business loans can help you build your credit score. As with any loan, you’ll want to borrow carefully, invest the money wisely, and make all payments on time.

If you just launched your business, you may still be able to secure business loans through a nontraditional credit history. Ask your lender if you can submit records of bill payments or other financial documents to establish your creditworthiness. You’ll then be able to start building credit the traditional way once you repay the loan.

You can also look into loans guaranteed by the government’s Small Business Administration.

If you don’t need financing and your priority is building your business credit score, look into Credit Strong’s credit-builder loans for businesses.

9. Monitor Your Business Credit Score

One of the easiest ways to build business credit is by correcting errors on your business credit report. You can receive a free business credit report each year from the major business credit bureaus:

• Experian
• Equifax
• Dun & Bradstreet

Checking your business credit won’t hurt your score if you only pull your report once each year. As a business owner, make a habit of performing an annual checkup to assess your business’s financial health.

If you discover an error in your credit history, report it immediately to the bureau that supplied the report. Erasing that error may vastly improve your business credit score. Remember that errors can take time to fully disappear from these reports, which is why it’s important to locate and report errors as soon as possible.

How Long Does It Take to Build Business Credit?

Building strong business credit doesn’t happen overnight. If you’ve just launched your company, it may take roughly a year before you develop a strong credit profile. Established businesses that practice these strategies might see improvements after a year.

Watch Your Numbers Carefully

The importance of your business credit score can’t be overstated. But by adopting a few basic strategies, you’ll be in a great position to build or improve your business credit, which can help you secure the financing you need to launch, maintain, or grow your business.

The post 9 Ways to Build Business Credit In 2023 appeared first on FinMasters.

Business credit scores aren’t only used when a business applies for a loan or credit card. Suppliers will also check a customer’s credit before extending terms. This makes building business credit a very important part of establishing a business.

But what is a good business score, and how do you achieve one?

Let’s explore the unique business credit bureaus, score ranges, and scoring criteria that define what a good score is and what you can do to achieve it.

What Is Good Business Credit?

Unlike personal credit scores, each business credit bureau has a unique scoring model with a different score range. A good credit score might be 60 or 1600. Credit bureaus use different criteria: some focus on payment history, while others weigh business age or assets more heavily.

Here’s a look at what business credit scores each credit bureau offers and what you need to achieve a good score.

What Is a Good Dun & Bradstreet Score?

Dun & Bradstreet (D&B), one of the biggest names in the business credit world, offers the PAYDEX score as their main business credit score. The PAYDEX score ranges from 1 to 100.

A good PAYDEX business score would be anything over 80, which indicates to lenders and vendors that your business has a low risk of making late payments.

The best way to achieve a PAYDEX score of 80 or higher is to ensure that your credit accounts are reporting to D&B and to always pay accounts on time. If your business is new, you may need to sign up for a DUNS number first.

In addition to PAYDEX, Dun & Bradstreet offers several other business credit rating scores, including their Delinquency Predictor Score (DPS), Supplier Evaluation Risk (SER), etc.

These alternative business credit scores often include business size, assets, industry, and equity in their calculations. The resulting scores/ratings can help predict the likelihood of a business going bankrupt, how vulnerable they are to cyber-attacks, and more.

What Is a Good Experian Business Credit Score?

Experian’s main business credit score, the Intelliscore Plus, ranges from 1 to 100. The score calculation factors in many aspects of your business, including business size, age, payment history, legal actions, etc.

An Experian Intelliscore below 50 would indicate a medium to high risk of late or missed payments in the next 12 months. 51-75 would be a good score, while 76-100 would be excellent.

Experian also offers a Financial Stability Risk Rating with a score ranging from 1 to 5; the lower the score, the better.

It is also worth noting that Experian recently released an updated model of their Intelliscore, version 3, which uses a scoring range of 300 to 850. In this model, a good score would be 720 or higher. This scoring model version is not yet widely used.

What Is a Good Equifax Business Credit Score? 

Equifax offers three business credit scores: a payment index score, a credit risk score, and a failure risk score.

The first one, the payment index score, has a range of 1 to 100. A score of 90-100 is excellent and can only be achieved by having zero late payments. One or two late payments (less than 30 days late) will lower your score to the 80s, which is still considered a good credit score.

The credit risk score ranges from 101 to 992. It is calculated using information such as company size, credit history, age, credit limits, delinquencies, etc. A score of 600 or higher would be considered good and requires several years of credit history and on-time payments.

The final Equifax business credit score, the failure risk score, provides insight into the likelihood of your business folding up shop within the next year. This score ranges from 1000 to 1610, with a higher score being better. 

What Is a Good FICO Small Business Scoring Service (SBSS) Score?

This business credit scoring model created by FICO ranges from 0 to 300. The higher your score, the better.

This particular score is heavily used in small business lending decisions. In fact, the Small Business Administration (SBA) requires this scoring model to be used for SBA-backed loans.

While a higher score is better, if you are looking for a 7(a) loan, you’ll need an SBSS score of at least 155. The score is calculated using info pulled from your business credit reports, business finances, loan application, and personal credit reports.

So if you haven’t been in business long but have decent personal credit and stable business finances, you have a shot of getting a good SBSS score even if you don’t have great scores from the other business credit bureaus.

How to Improve Your Business Credit?

If your business credit scores aren’t the best, there are several steps that you can take to help improve your business credit.

Below we’ll look at how you can build business credit, how you can fix bad business credit, how to monitor your business credit, and how personal credit can impact your business credit.

How Do You Build Business Credit?

Building business credit takes time. Many scoring models require your business to have been operational with multiple credit lines for several years before giving you a good credit score. But time isn’t the only important factor.

On-time payment history is just as important, so try not to exceed your net terms. For example, for a net 30 account, you’ll want to pay on day 30 or sooner.

Credit utilization is also important, so try not to use up all your available credit. One piece of good news: credit inquiries are not factored into business credit scores.

How Do You Fix Bad Business Credit?

If your business scores are bad, you must first figure out why.

If age is the problem, you can improve your credit by establishing new accounts, paying them on time, and being patient. While getting new accounts can be difficult with poor business credit, low-credit options like credit builder loans and secured cards exist.

Poor payment history can drag down your score, so paying your utilities and suppliers on time is important. It is worth noting that some scores use an average for payment history, so paying early can help outweigh late payments.

You can also try negotiating better net terms. I.E., extend a net 30 account to net 60 terms.

Fraudulent accounts can also give you a poor business credit score, and catching them quickly with a business credit monitoring service can lessen the impact.

How to Monitor Your Business Credit

Unlike consumer credit, you have limited options for checking your business credit scores and reports. If you want access to credit monitoring or credit-building features, you might need to pay a premium.

Below are nine free and paid services you can use to obtain your business credit scores.

*A separate credit building secured business credit card is available through the app. 

Why Is Good Business Credit Important?

Your business credit scores help lenders and vendors decide if they want to develop a relationship with you. So having good business credit scores will help your business thrive, while bad ones limit your growth opportunities.

Good business credit is just one of many steps needed to develop a successful business. Still, it can be one of the easiest benchmarks to achieve, and it’s a foundation for further positive developments.

The post What Is a Good Business Credit Score? appeared first on FinMasters.

Checking your business credit isn’t as easy as checking your personal credit, as the resources available are much more limited. Not all of the options for checking and monitoring your business credit are free.

Let’s take a look at how you can check your business credit directly with the credit bureaus and at some 3rd party services you can use to get free business credit scores.

How Do I Look Up My Business Credit Score?

Unlike personal credit, there is no law protecting your rights to view your business credit reports. Because of this, options to check your business credit are fewer in number. There are still resources for acquiring business credit scores.

Let’s start by exploring how you can obtain business credit reports and scores directly from the credit bureaus.

How to Check Your Dun & Bradstreet Paydex Score

You can check your business’s PAYDEX score directly with Dun & Bradstreet using their CreditSignal subscription.

Your initial score check will include access to your PAYDEX score, Delinquency Predictor Score, Financial Stress Score, and Supplier Evaluation Risk Rating. You’ll get access to these scores for 14 days for free.

If you want access to your D&B scores beyond 14 days, you’ll need to pay for one of their premium subscriptions.

Premium plans start at $15/month and go up to $199/month and provide unlimited access to scores, with the more expensive options also offering credit monitoring features and credit building features.

How to Check Your Experian Business Credit Score

You can get your Experian business credit scores and a copy of your business credit report directly from Experian using one of their report purchase options.

A single report starts at $39.95. It includes your Intelliscore Plus, Financial Risk Rating, and full credit report.

Experian also offers a business credit monitoring service that costs $189/year.

If you have an international business or want to check the credit scores or reports of other businesses, Experian also has purchase options for these.

How to Check Your Equifax Business Credit Score

Equifax lets you create a business user account to manage certain aspects of your business credit, such as inquiries, business addresses, and more.

There is no set service for requesting a copy of your business credit report, but once you have this user account set up, you can contact customer support and inquire about receiving a credit report. You’ll have to show that the report is associated with a lending decision.

The good news is that Equifax will not charge you for this credit report.

It is worth noting that Equifax previously offered a pay-for-report option as recently as 2020. It has since discontinued this service.

How to Check Your FICO SBSS Score

While FICO offers a variety of subscription plans on their MyFICO website for pulling and monitoring your personal credit scores, they lack these options for their business credit scores.

How to Check Your Business Credit Score for Free

In addition to checking your business credit scores directly with the business credit bureau, there are 3rd party companies that can give you access to your business credit scores. Many of them offer this service for free!

Below are three ways to check your business credit for free:

1. Nav

Nav gives you access to business credit scores from all the major business credit bureaus and guides you on what types of credit products you can qualify for.

When you select a loan, line of credit, or credit card through Nav, Nav gets a fee from the lender for the recommendation.

Nav currently offers free access to your D&B Paydex score, Equifax Delinquency Score, and Experian Intelliscore, as well as your Experian and TransUnion Vantage scores (consumer credit).

They also offer a Business Boost subscription product for $49.99/month that gives you additional access to your SBSS score and credit monitoring and building services.

2. Tillful

Only available on iOS devices, the Tillful app is similar to Nav. They aim to match you with business credit cards and loans, and they receive a fee from partner lenders.

Tillful offers two business credit scores. One is their proprietary Tillful credit score. This is not used by lenders or vendors but is designed to give you an idea of the overall health of your business credit.

Tillful also offers you free access to your Experian Intelliscore business credit score. This scoring model uses version 3, which is not yet widely used. In addition, Tilful’s partnership with Experian extends to a branded secured business credit card that only reports to Experian.

3. Credit Bureaus

As mentioned earlier, you do have limited access to obtain your business credit reports directly from the credit bureaus for free.

D&B offers 14-day access to your D&B business credit scores for free, and Equifax lets you pull a free business credit report under limited circumstances.

While these direct-from-the-credit-bureau options aren’t great for long-term business credit monitoring, they can help you get a quick snapshot of what your business credit looks like right now.

Conclusion

When you operate your own business, having a good business credit score is even more important than having an excellent personal credit score. This is because business credit has a significant impact on your vendor relationships as well as lending opportunities.

And just like with personal credit, checking your business credit reports regularly can help you improve your credit score and catch fraud early.

Whether you are using a free 3rd party service or checking your business credit scores directly with the credit bureaus, keeping track of your business credit can help you protect the future of your business.

The post How to Check Your Business Credit Score appeared first on FinMasters.

But how long does it take to build business credit?

Once you’ve established your business and taken out a few tradelines, you can build business credit. It may only take a few months for your business to begin generating a business credit score, but it may be several years before you can generate a good score.

In this article, we’ll look at how long it takes to build business credit and the steps you can take to build a good credit score.

How Long Will It Take Me to Build Business Credit?

Building business credit and the speed at which you can do it will depend on various factors, including your industry, your assets, the number of tradelines your business uses, how long you’ve been in business, and more.

There is a big difference between how long it will take you to begin generating a business credit score and how long it will take you to reach a good business credit score.

Business Credit Scores

Several different companies supply business credit scores. These are some of the most common.

• The Dun & Bradstreet PAYDEX Score.
• FICO‘s Small Business Scoring Service (SBSS) score.
• The Experian Intelliscore Plus.
• Equifax offers a payment index score, a credit risk score, and a failure risk score.

Each of these uses a different scoring system and a different rating formula.

Learn more: What business credit scores each credit bureau offers and what you need to achieve a good score: What Is a Good Business Credit Score?

You Need Tradelines

You generate a business credit score when tradelines begin reporting to the business credit bureaus. Tradelines can consist of accounts with suppliers, utilities that your business pays, lines of credit, credit cards, lease agreements, etc.

Not all of these tradelines will report to the same credit bureaus. Each utility, supplier, and lender has a choice of when and how to report. For instance, a supplier may only report your account to Equifax and Experian or may report your account only once every 60 days. 

And sometimes, a supplier or utility may only report delinquent accounts to the business credit bureaus. According to Experian, out of 500,000+ suppliers, only roughly 10,000 are reporting credit account activity.

How Quickly Can I Get a Business Credit Score?

This depends on both your tradeline(s) and the credit bureaus. Not all tradelines will report at the same time to the same credit bureaus, and not all credit bureaus will process the tradeline information in the same timeframe.

The quickest business credit score to establish will likely be the FICO SBSS. This scoring model considers your personal credit, business assets, and business credit. That means you can generate an SBSS score even if you don’t yet have any business tradelines reporting.

The other business credit bureaus will not generate a score until tradelines begin reporting.

Once you’ve opened a tradeline, it can take 1 to 3 months for the account to appear on your business credit reports. And you’ll likely need a few months of reporting before the credit bureau will generate a score for your business.

For Dun & Bradstreet, you will need ar a DUNS number. The application process can set you back another 30 days.

Considering all of this, it can take upwards of 6 months for the credit bureaus to begin generating a credit score for your business.

How Long Will It Take to Get a Good Business Credit Score?

Generating a good business credit score could take as little as a year or as long as 3+ years.

This is because each business credit bureau has a unique scoring model that weighs business age, payment history, business assets, tradeline activity, and other factors differently.

A good FICO SBSS score meets the lender’s minimum lending requirements (140 for SBA loans). Since this scoring model factors in personal credit and business assets, even with limited business credit, you could generate a good SBSS score in less than 12 months, provided you have decent personal credit and good business financials.

Most of the other business credit scores are dependent on credit history. This includes payment activity, credit utilization, and more. The more tradelines you have reporting on-time payment and low credit utilization, the quicker your score will hit that good threshold.

For these credit bureaus, you can achieve a good credit score in as little as a year, but on average, it takes 2 or 3 years.

Unfortunately, if you have high credit utilization, late payments, or a large number of accounts that aren’t reporting to the credit bureaus, then it might take you more than three years or more to hit the good credit mark.

Steps For Building Business Credit

When you begin building credit, there are a few steps you need to take to get everything set up properly.

The below steps guide you through what you need to do before tradelines can begin reporting to the credit bureaus and how to maximize the impact of those tradelines.

Step 1: Setup Your Business

This includes opening separate bank accounts and applying for an EIN.

Having a separate bank account (checking and/or savings) helps separate your personal and business finances. This will allow you greater accuracy in tracking your business finances.

Applying for an EIN can take as little as a few minutes (online) or as long as four weeks (by snail mail). Having an EIN helps to identify your business and protect you legally.  This number will be required for most business credit applications.

Step 2: Get a DUNS Number

If you want to establish business credit with Dun & Bradstreet, you’ll need to apply for a DUNS number. This number is the unique number that Dun & Bradstreet uses to identify your business.

The application process for a DUNS number can take up to 30 days. If you need one faster, you can pay an expedited application fee of $229 to get your DUNS number in less than eight days.

Step 3: Open Tradelines

Once you have your EIN and DUNS number, you can then open lines of credit and other types of tradelines.

You’ll want to ask each company/lender which credit bureaus they report to and when since not all companies report account activity. If possible, you’ll want to get multiple tradelines reporting to each of the three main business credit bureaus (Equifax, Experian, and D&B).

Step 4: Pay Bills On Time

One of the biggest factors in business credit score calculations is payment history. In fact, the whole purpose of someone checking your business credit is to determine if you are likely to make on-time payments to them.

Payment history is one of the most important factors in business credit score calculations. In some business scoring models like Equifax’s Payment Index and D&B’s PAYDEX score, the focus is almost exclusively on payment activity.

Step 5: Monitor Your Credit

How do you know what your business credit reports look like if you aren’t regularly checking them? Monitoring your business credit is a great way to keep on track toward building good business credit.

Monitoring will also show you which tradelines are reporting and which aren’t. And it can help notify you of potential fraud so that you can nip it in the bud early.

Watching your credit score rise can also be very rewarding.

Tips for Building Business Credit Faster 

If you are struggling to get new tradelines open, there are a few options you can explore to build your credit faster.

These subscriptions/accounts can help you get more tradelines reporting to your business credit, lowering your credit utilization while improving your payment history.

You can also look into other quick credit-building options like opening a secured business credit card, increasing the credit limit on existing tradelines, paying down debt, and more.

Build Business Credit With Patience 

Building business credit is important, but it isn’t the sole mark of a successful business. Your assets, customer base, revenue, employees, etc., all matter too. 

Attempts to build business credit quickly should never put your business too far in debt, nor should it damage relationships with your suppliers, partners, or customers. 

While it can be frustrating, the best way to build business credit is to pay on time and have patience. 

The post How Long Does It Take to Build Business Credit? appeared first on FinMasters.