Business Credit and Personal Credit: Two Independent Scores
The personal and business credit scores are independent and have no impact on one another.
Business credit scores aim to provide potential business partners, vendors, lenders, or clients with a measure of your company’s ability to repay its debts on time.
A healthy commercial credit score is essential to building successful business partnerships, but it also makes your life simpler and safer as a business owner. For example, strong business credit may prevent you from agreeing to personal guarantees for your business obligations.
And creditors will not be the only ones checking your commercial scores. Investors, insurance companies, and even potential business partners may do so.
In fact, unlike personal credit access, which requires the stated permission of the credit holder, business credit scores are readily available to the public. Anyone can get your company’s business credit score from a business credit reporting agency by paying the required fee.
How is it calculated?
The primary business credit report agencies are Dun & Bradstreet, Equifax Business, and Experian Business.
In some cases, businesses must proactively register with these agencies to begin building a trackable profile.
Business credit reporting bureaus use your company’s profile and financial performance information to produce your commercial credit score.
The business data that they evaluate include:
- Company information, business start date, company ownership, business type, revenues, number of employees,
- Existing credit obligations,
- Payment history with suppliers and lenders,
- Legal filings such as tax liens, judgments, or bankruptcies,
- Financial performance relative to similar companies in similar industries,
- Industry risk and, of course,
- Proprietary metrics.
While personal credit scores use your Social Security Number as a unique identifier, business credit scores use your business name, address, and Federal Employer Identification Number (EIN) instead.
The scoring ranges are different as well. While personal credit scores are measured on a scale from 300 to 850, commercial credit scores are generally calculated from 1 to 100, where 1 indicates the highest risk possible and 100 is the lowest.
While different credit bureaus will use different sub-ranges within the 1-100 scale, the ranges below, used by Experian, are generally observed:
- Low 76-100
- Low Medium 51-75
- Medium 26-50
- Medium-High 11-25
- High Risk 1-10
The SBA provides a practical guide to building a business credit profile here. Building a strong one requires deliberate action, regardless of company size. The steps are straightforward but must be taken proactively. Once your profile is active, monitor it regularly and request that positive payment experiences be added where applicable. Work with vendors and suppliers that report payment activity to the major business credit bureaus, and pay consistently on time or early.
Business Credit and Financing
Lenders across conventional lending and SBA financing review business credit as a standard part of underwriting. For other financing structures, including asset-based lending and specialty finance, business credit is one of several factors lenders may consider alongside collateral quality and cash flow. A higher score typically translates into better terms, lower rates, and less reliance on personal guarantees.
Beyond cost and structure, business credit also affects access. A strong commercial credit profile expands the range of lenders willing to engage, increases the likelihood of approval, and reduces the conditions or covenants attached to a facility. For businesses that anticipate needing capital as they grow, building and maintaining a strong business credit profile before that need arises is a meaningful strategic advantage.
Monitoring and maintaining your business credit profile is not just good practice. It is part of positioning your company for the capital it will need to grow.
If you have questions about how your business credit profile may affect your financing options, contact i95 Capital.