What Your Business Credit Score Means to Your Future Success
Just like how individuals have a credit score that impacts their ability to open credit cards and negotiate loans, businesses have a business credit score that can have a significant impact on their operations. There are, though, some noticeable differences between a personal credit score and your business’ credit score:
- Business scores range from zero to 100
- You must pay a fee to receive your business’ score
- Business scores are not private, meaning anyone willing to pay the fee can see your score
- There’s no industry standard for tabulating the score, meaning each credit agency has a different process and may utilize different data points
Potential Business Impacts
Having a good score comes with many financial benefits. First, having a decent business credit score means that you’ve qualified for loans or credit cards and have been paying them back according to schedule. That in and of itself is an indicator that your business is well-run and not encumbered by unnecessary debt.
Additionally, you’ll be able to qualify for favorable loan terms, as well as take out loans of increasing value, allowing your business to grow at a rate that matches your customer base. Continuing to pay back those loans allows your score to keep expanding, too.
A solid credit score will also help when it comes to purchasing insurance for your company. Demonstrating your corporation’s ability to pay back loans on time can help keep insurance rates low, even as your business scales.
One of the main reasons that business incorporate or establish themselves as limited liability properties is to separate business and personal finances. Having corporate credit cards or loans, thus building a credit score for your business, also helps to separate your individual credit score from your business one.
Finding Your Business Credit Score
As stated earlier, credit scores are not free for business, and each company charges a different fee. Luckily, the highest one is still under $100, so this necessary piece of information shouldn’t be too expensive. However, it may still be a good idea to purchase all of your business’ credit scores, as each report comes with different information, from credit scores to payment summaries to public records. The best way to obtain these scores is through each credit agencies website, where you can also place credit freezes or take other actions to protect your scores.
Your business credit score is incredibly useful. It impacts your ability to take out loans, get reasonable rates on insurance coverage, and helps separate your personal and commercial finances.