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This Is How Your Business Credit Score Is Calculated

By Christy Bieber – Oct 8, 2018 at 5:02PM

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Your company actually has multiple credit scores. Find out how the four most important business credit scores are calculated.

Does your business have good credit? Companies get a credit score, just as individuals do, and your company's score affects whether it can borrow and the interest you'll pay. 

Figuring out your score can be complicated, especially since your company doesn't have just one. Different reporting agencies -- including Experian, Equifax, Dun & Bradstreet, and Fair Isaac -- have their own scoring formulas, so there's variation from one credit score to the next. 

Here's what you need to know about how each of these scores is calculated based on different factors relevant to your organization. 

Stack of colorful credit cards randomly piled on the other

Image source: Getty Images

Your Experian business credit score

Experian uses Intelliscore Plus as its credit scoring model. The score range is between 1 and 100, and more than 800 variables are considered when assigning a score. The most important factors that determine your score ranks are: 

  • Outstanding balances on debt
  • The amount of debt you have, relative to credit available
  • How many times you've borrowed
  • The size of your company
  • How long you've been in business
  • Your business size 

Experian, along with other credit reporting agencies, collects data from lenders and suppliers, legal filings, collection companies, marketing databases, state filing offices, and others with information about your organization. 

Equifax business credit score

Equifax actually assigns three different scores including:

  • A payment index score: Using data from small business lenders, public records, and trade records, Equifax assesses payment history over the prior year. Your score ranges from 0 to 100, with late payments lowering your score.  
  • A credit risk score: This score evaluates your credit limits, company size, and credit history to assess the likelihood you'll fall seriously behind on payments. Your score ranges from 100 to 992. 
  • A business failure score: This score, which goes from 1,000 to 1,880, is focused on the likelihood of your business failing within a year. It considers the age of your oldest financial accounts, your history of late payments including supplier invoices, and the amount of available credit you use. 

Your Dun & Bradstreet credit score

Dun & Bradsteet uses a Paydex score to measure risks. The score range is 0 to 100 and the key factor considered in assigning the score is the time it took to repay your debt, relative to repayment terms agreed upon with your creditor.

In order to obtain a Paydex number to get your score, you'll need to file for a free DUNS number and at least four lenders or suppliers must provide information about your company's borrowing habits. 

Your FICO SBSS score

Fair Isaac has a FICO Small Business Scoring Service, and the score your company can earn ranges from 0 to 300. The score is based on:

  • Your personal credit score
  • Your company's history of on-time payments
  • How old your business is
  • The number of employees you have 
  • Your company's revenue and assets 

The FICO SBSS score is typically used by lenders to decide whether to lend you up to $1 million. Higher scores, obviously, are preferable to lower ones. 

You can earn a good company credit score

While credit reporting agencies and scoring models vary, most of the formulas take into account how much credit your company uses, as well as how effective you are at making payments on time. To make sure each score is as high as possible, pay your bills on time and avoid maxing out the credit lines available to you. Your company's positive credit history will make it cheaper and easier to access credit when you need it, so it's worth the effort.

Christy Bieber has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Fair Isaac. The Motley Fool recommends Experian. The Motley Fool has a disclosure policy.

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Stocks Mentioned

The Dun & Bradstreet Corporation Stock Quote
The Dun & Bradstreet Corporation
DNB
Experian plc Stock Quote
Experian plc
EXPN
$2,664.00 (-0.45%) $-12.00
Equifax Inc. Stock Quote
Equifax Inc.
EFX
$172.19 (-0.67%) $-1.16
Fair Isaac Corporation Stock Quote
Fair Isaac Corporation
FICO
$432.00 (0.89%) $3.82

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