Understanding your business’s credit score can be tricky, especially for newer business owners. However, these numbers are incredibly important when it comes to determining a company’s creditworthiness. It can also determine a lot of the opportunities you are going to be extended far as interest rates on credit scores and the size of the loans your company can take out.
So, how are these credit scores determined?
Credit scores are determined by four (4) primary companies called 1) Dun & Bradstreet, 2) Experian, 3) Equifax, & 4) FICO.
These Scores Explained:
Your credit scores will rely heavily on the following factors to determine how good (or bad) your credit score will be:
• The timeliness (or lack thereof) of your payment history with both current and previous creditors and lenders
• The amount of money you owe past creditors or companies that you have borrowed from
• The size and age of your company (so you can have established a good history of on-time payment)
• Individual agencies reporting on your credit score (all coupled together)
These various factors and reports from all 4 agencies will add up to up to determine your credit score at any given time. As you continue to do business, the history of your credit score will continue to grow, evolve, and change whether that is for better or for worse.
How Do I Check My Business Credit Score?
Generally speaking, most of the time, you will have to pay to check your business credit score. Each website for each of the 4 companies will their own fees that are charged in order for you to get a report from their site.
Be wary of websites that offer “free credit reports” as many of them are often scams.
The best rule of thumb? If it sounds too good to be true, then it probably is.
Check the sources directly to ensure you are getting the most accurate information possible.
Why Is It Important to Check Your Business’s Credit Score?
It’s important to check your credit scores for your small business as these agencies can easily mix up information and can make mistakes on your credit report. If you notice activity on your report that you did not authorize, then speak up and contact the agency to get the information removed or fixed. If you don’t speak up, no one else is going to do that for you and your credit report can be negatively effected.
Moreover, if you don’t know there are negative reports on your credit report you may end up getting denied for a loan or lease for equipment you need for your business and never know why. Creditors look at your scores before awarding you any monies or loans to do almost anything for your business, so check to make sure that your business credit score is as accurate and strong as it can be.
For more information on how to ensure your business credit score is as strong as it can be please feel free to contact us at IRC Commercial Lending for further assistance.