Credit is an important part of business activity. It’s considered good business practice to pay your bills on time, as it shows you are a committed and responsible customer.
But sometimes you may not be able to pay your bills on time, maybe because of a lag in sales or other issues. It’s important to know how your business is performing from a credit perspective.
Read on to find out more about what a business credit score is.
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What Is a Business Credit Score?
It is also known as a corporate credit score, commercial credit score, or risk score. A specific credit reporting agency, such as Experian, D&B, or Equifax, usually calculates a business credit score.
It can also help to establish the terms of a loan, such as the interest rate charged or the amount of down payment required. Keeping a good business credit score is important for starting a business and maintaining access to credit.
Why Does It Matter?
A business credit score is a numerical representation of how creditworthy your business is to potential lenders. It reflects your business payment history, the number of accounts in good standing, and the amount of available credit in relation to credit limits.
Knowing your business credit score is important because it can determine the likelihood that you’ll be approved for favorable loan terms, as well as what interest rates you’ll be offered.
How Can I Access It?
Every business needs a good credit score to succeed. A business credit score is a three-digit numerical representation of how creditworthy a business is to potential lenders. It can help lenders decide whether to approve a loan or other credit services like the best business credit cards.
By registering for a subscription service from any of these agencies, business owners can view their credit scores, get insights on potential risk factors, and even receive tips on ways to boost their scores.
How Can I Improve My Business Credit Score?
This score is determined by multiple criteria, including payment history and credit utilization. In order to maintain a good credit score, businesses should pay bills in full and on time, maintain low accounts receivable balances, and apply for new business credit only as needed.
Additionally, a business should actively monitor its business credit score by regularly acquiring credit reports from the three major credit reporting bureaus. By following these guidelines, businesses can significantly improve their business credit score and gain access to better business financing opportunities down the road.
Learn More About Business Credit Score
Your business credit score is an important base tool to gain access to capital, as well as for better pricing and terms on credit facilities. Business credit scores also come in several types and are assigned by a variety of credit reporting agencies.
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