What Is a Good Business Credit Score?

Using a business credit card can help you to build a good business credit score and also be key to obtaining loans, getting favorable payment terms, and winning new business. But knowing what constitutes a “good” score gets a little more complicated for businesses, compared with determining the same status for personal credit scores. 

One reason for this is that there are four main business credit reporting agencies: Dun & Bradstreet (D&B), Experian, FICO Small Business Scoring Service (SBSS), and Equifax. And unlike personal credit scores that range from 300 to 850, business credit rating agencies tend to use their own numeric ranges for their scoring systems – what’s considered a good score by one agency may not be deemed good by another. Also, not only does each of the four business credit reporting agencies use its own proprietary scoring algorithm, but several have multiple scoring configurations that reflect different aspects of a business’s financial stability and reliability. 

Because the lack of scoring consistency among credit reporting agencies can be confusing, let’s examine what a “good” business credit score means at each agency, what financial factors each may take into account, and how a business can improve its credit score.

What Is a Good Dun & Bradstreet Credit Score?

D&B credit score information is used by potential business partners, vendors, suppliers, and lenders to assess the business’s financial stability and credibility. D&B looks at factors such as payment history and financial performance, based on information gathered from public sources, including financial statements, legal judgments, and news reports. In addition, vendors, lenders, and suppliers can report a business’s payments directly to D&B (as well as the other credit reporting agencies), and this data also gets factored into the credit score calculation. 

To get a D&B credit score, a business must first obtain a D-U-N-S number. Like a Social Security number for individuals, a D-U-N-S number is a nine-digit ID used to identify a business and check its credit profile. Businesses can request a D-U-N-S number from D&B, or D&B will generate one when a vendor, lender, or supplier reports a business’s payment history to D&B. 

There are three possible D&B business credit scores: the Delinquency Predictor Score, the PAYDEX Score, and the Failure Score.

• The Delinquency Predictor Score forecasts the likelihood that a business will make severely late payments or seek legal relief from creditors within the coming year. Scores range from 101 to 670, with 670 being the “best” score, or lowest indication of delinquency, but any score above 580 indicates minimal chances of delinquency.
• The PAYDEX Score measures a business’s past payment history to help creditors, lenders, suppliers, landlords, and even insurance companies decide whether to do business with the company, as well as what credit terms and insurance premiums to charge. PAYDEX scores range between 1 and 100, with 100 being the “best” score. Scores of 80 and above may be considered good, because they signify a low-risk business that always pays its creditors on time. 
• The Failure Score forecasts the likelihood that a business will seek legal relief from creditors or shut down without paying its creditors within the next year. The Failure Score ranges from 1,000 to 1,875, with 1,875 being the “best” score. Scores above 1,570 may be considered good because they indicate the lowest probability of failure.

What Is a Good Experian Business Credit Score?

Experian business credit scores are calculated with a proprietary algorithm that compares your business to other businesses. Experian uses factors such as:

• Credit history (number of trade experiences, outstanding balances, payment habits, and credit utilization trends)
• Public record information (liens, judgments, or bankruptcies)
• Demographic information (industry, years on file, and business size)

Experian business credit scores range between 1 and 100, with 100 being the “best” score. The average Experian business credit score is 62, which is in the low- to medium-risk range. A business with an Experian credit score above 76 is considered “low risk.” 

What Is a Good FICO Small Business Scoring Service Credit Score?

FICO SBSS is often used by lenders and the U.S. Small Business Association (SBA) to assess a business’s credit risk. SBSS scores weigh factors such as the business’s assets and liabilities, cash flow and revenue, the length of time the company has been in business, and any liens or judgments. Unlike some of the other business credit rating agencies, FICO SBSS also reviews the business owner’s personal credit score. 

A good credit score can help a business unlock the funds needed to sustain everyday operations and support growth, just as a good personal credit score can help individuals obtain the financing they need to build their future.

FICO SBSS business credit scores range from 0 to 300, with 300 being the “best” possible score, indicating low risk. As of June 2022, the minimum FICO SBSS credit score required to qualify for an SBA 7(a) loan of up to $350,000 is 155, suggesting that a score above 155 is a good target.

What Is a Good Equifax Business Credit Score?

Equifax primarily generates credit reports for small businesses. These reports also include three types of business credit scores: the Credit Risk Score, the Payment Index Score, and the Business Failure Score.

• The Credit Risk Score assesses the likelihood that a business will become delinquent on payments within the next year. It’s based on factors such as payment history, the age of the oldest business account, available credit on trade accounts, and company size. Scores range between 101 and 992, with 992 being the “best” possible score. 
• The Payment Index Score measures a business’s history of on-time payments. Scores range between 0 and 100, with 100 being the “best.” A score of 90 and above indicates that all creditors have been paid on time. 
• The Business Failure Score predicts the likelihood that a business will shut down within the next year. The score is based on factors such as age of the oldest business account, credit utilization ratio, and payment history. Scores range from 1,000 to 1,880, with 1,880 being the “best” possible score.

How to Get a Good Business Credit Score

Once a business has contracted with a vendor or taken out credit, its payment history will likely be reported to the business credit rating agencies, which use that information to calculate the business’s credit score. Here are some ways a business can establish and maintain a good credit score:

1. Make on-time or early payments to creditors.

For all business credit reporting agencies, payment history plays a major role in determining a business’s credit score. At the very least, it’s critical to make on-time payments – late payments will hurt a business’s credit score – but early payments are even better. Some credit rating agencies, like D&B, give the highest scores to businesses that make payments as much as 30 days in advance. 

2. Continually monitor credit reports and ensure their accuracy.

Each of the four credit rating agencies generates its own credit report to provide information on a business’s creditworthiness and financial responsibility. Since a business’s credit score is usually generated using the information in those reports, it’s crucial to ensure that they’re accurate. Businesses can access their credit reports through a third-party provider or go directly to each of the four credit rating agencies’ websites. Businesses can contact the agencies to correct inaccuracies or provide missing information if its credit profile is incomplete.

3. Ensure that creditors are reporting payments to credit rating agencies.

Creditors are not required to report a business’s payment history. If a business is trying to improve its credit scores by making on-time and/or early payments to creditors, it should make sure its creditors are actually reporting that information to the credit rating agencies. Business credit scoring agencies suggest that businesses reach out to creditors with whom they’ve built strong relationships and request that they start reporting payment history information, if they aren’t already doing so.

Why Is It Important to Have a Good Business Credit Score?

Like personal credit scores, business credit scores show whether a business is likely to make payments on time and satisfy its debts. Business credit scores help a potential lender, vendor, supplier, or even a future business partner assess a business’s financial trustworthiness. A good credit score can help a business unlock the funds needed to sustain everyday operations and support growth, just as a good personal credit score can help individuals obtain the financing they need to build their future.

More specifically, having a good business credit score can help companies:

• Get approved for business loans.
• Qualify for lower insurance rates.
• Obtain trade credit.
• Negotiate favorable payment terms.
• Finance purchases of machinery and equipment.
• Acquire inventory.
• Attract reputable business partners, vendors, and suppliers.
• Expand business operations.

The Takeaway

Each of the four main business credit rating agencies – Dun & Bradstreet, Experian, FICO SBSS, and Equifax – uses its own credit score rating system to indicate the financial trustworthiness of a business, so a “good” business credit score number can differ, depending on which credit rating agency’s scoring model is being referenced. Regardless of the scoring model used, smart credit habits, such as making on-time or early payments and continually monitoring credit reports for completeness and accuracy, can go a long way toward building and maintaining a desirable business credit score.

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