Business credit scores are widely used by suppliers, lenders, and insurers as one of the indicators of the creditworthiness of a business. Most lenders check for multiple credit reports from different credit bureaus to assess a company’s capacity to pay. This is because different business credit bureaus may have different information about a company’s financial health and credit status.
That being said, there are several different types of business credit scores. Each of these is calculated and provided by different credit reporting agencies.
Here are the most commonly used types of business credit scores.
PAYDEX score is the credit scoring used by D&B, which ranges from 1 to 100. It is calculated using a proprietary algorithm that takes into account a variety of factors. Including payment history, length of credit history, number of recent credit inquiries, and the total number of trade experiences reported to Dun & Bradstreet by its trade creditors.
To acquire a Paydex score, you will need to have a D-U-N-S Number, a unique nine-digit number assigned by Dun & Bradstreet. It is used to identify your business for credit reporting purposes. To obtain a D-U-N-S Number, you can go to Dun & Bradstreet’s website and request one.
The PAYDEX score is updated monthly as new payment information is reported to the credit reporting agency.
Intelliscore Plus score
Like PAYDEX, the Experian Intelliscore Plus ranges from 1 to 100, with a higher score indicating better creditworthiness. It is based on a business’s credit report and financial statement data. The information in Experian credit reports is collected from a variety of sources. This includes trade creditors, banks, and government agencies.
In addition, the Intelliscore Plus score incorporates financial statement data such as profitability, liquidity, and debt management to determine a business’s overall creditworthiness.
Businesses with Intelliscore Plus scores above 75 are generally considered to have a low credit risk, while those with scores below 55 are considered to have a higher credit risk.
It’s worth noting that Experian also offers a number of other business credit scores and reports. Like the Business Credit Risk Score, which uses a numerical scale to evaluate a business’s credit risk. Experian also provides detailed credit report that includes information about a business’s credit history, payment patterns, and trade experiences.
Businesses can access these reports and scores through an online account with Experian. It’s also important to note that the score should be used with other creditworthiness indicators and the business’s financial situation. The Intelliscore Plus score is just one of the factors considered by lenders. The score is updated monthly as new information is reported to Experian.
FICO SBSS Score
The FICO SBSS (Small Business Scoring Service) score is a tool used by the Small Business Administration (SBA) to assess the creditworthiness of small business loan applicants. It ranges from 0 to 300, with a higher score indicating a lower credit risk.
The FICO SBSS score is based on information from a business’s credit report and additional data. Such as the business’s financial statements and the business owner’s personal credit score. It evaluates the creditworthiness of a business taking into account several factors. Like payment history, credit utilization, length of credit history, and the total amount of debt.
To access your FICO SBSS score, you must work with a lender participating in the SBA loan program. Banks and lending institutions authorized by the SBA may provide the score to their applicants. In addition, the score can be accessed through the lender’s website or by request. This credit score is commonly used as a requirement for SBA loan approval.
The FICO SBSS score is not readily available to the general public. However, if you are not seeking an SBA loan, you may be able to find other credit scores from Dun & Bradstreet, Experian, and Equifax that would give you a general idea of your creditworthiness.
Equifax Business Credit Risk Score
The Equifax Business Credit Risk Score is provided by Equifax, one of the three major credit reporting agencies in the United States. This score is used to assess the creditworthiness of a business, similar to how a FICO score is used to assess the creditworthiness of an individual. The score ranges from 101 to 992, with a higher score indicating a lower credit risk.
The score is based on information from a business’s credit report and is calculated using several factors. Such as payment history, credit utilization, length of credit history, and the total amount of debt.
The Equifax Business Credit Risk Score is intended to provide lenders, landlords, suppliers, and other business partners with a quick and easy way to evaluate the creditworthiness of a business. In addition, it can be used with other information to make lending, leasing, and credit decisions.
You can get Equifax Business Credit Risk Score by subscribing to Equifax Business credit reports and services. Unfortunately, it is not readily available to the general public.
PayNet Small Business Default (SBD) Score
This score ranges from 0 to 100 and predicts the default likelihood of a small business based on the previous payment performance of similar businesses.
PayNet is a provider of small business credit data and risk management solutions. It calculates the PayNet Small Business Default score based on data it collects from millions of commercial loan and lease transactions. It evaluates the creditworthiness of a business by assessing payment history, credit utilization, length of credit history, and the total amount of debt.
Additionally, PayNet also offers other types of data and analytics services. Like industry benchmarks, monitoring, and alerts to support its clients’ underwriting and risk management process.
To obtain your PayNet Small Business Default Score, you can contact PayNet directly and request a copy of your score. Like other credit scores, the PayNet score may be used with other creditworthiness indicators and the business’s financial situation.
Importance of Monitoring Your Business Credit Scores from Different Credit Bureaus
Having a good understanding of your business credit profiles across multiple credit reporting agencies is important for a few reasons:
First, each agency may have different information on your business. This is because they may collect data from different sources. So, checking your credit profiles across multiple agencies can give you a complete picture of your business’s creditworthiness.
Second, each credit reporting agency uses different methods to calculate your credit score. Hence, it is important to understand the score provided by each agency and the meaning and significance of that score. By understanding how each agency calculates your score, you can take steps to improve your score accordingly.
Another reason is lenders may check credit reports and scores from multiple credit reporting agencies. By monitoring your business credit scores across multiple agencies, you can ensure that the information being reported is accurate and up to date. This also helps you take steps to improve your score if necessary.
Last but not least, different agencies may provide more detailed or specialized information. For instance, industry-specific scores can be more useful in assessing creditworthiness in those sectors.
It’s important to note that different credit reporting agencies may use different algorithms to calculate credit scores, so scores may vary between agencies.
Furthermore, remember that a good credit score is not the only factor lenders consider when evaluating a loan application. They also look at the overall financial health of the business, its cash flow, revenue, and other factors. So, even if a business has a good credit score, it doesn’t guarantee it will be approved for credit.
A good business credit score varies depending on the scoring system being used. However, a score above 70 is generally considered good for most business credit scores.
For the Equifax Business Credit Risk Score, 80 or higher is generally considered good, as it indicates a low credit risk. A score in the 70-79 range is considered fair, and a score below 70 is considered poor.
For the FICO SBSS score, a score above 150 is considered good, a score between 100 and 150 is considered fair, and a score below 100 is considered poor.
Business credit scores work similarly to personal credit scores. They evaluate the creditworthiness of a business based on information from the business’s credit report. The credit report contains information about a business’s credit history, including payment history, credit utilization, length of credit history, and the total amount of debt.
Creating a business credit profile involves:
Obtain a Federal Tax ID Number (EIN)
Open a business bank account
Establish credit with suppliers and vendors
Obtain a D-U-N-S Number
Register your business with business credit reporting agencies
Build a positive credit history
Monitor your credit reports
To learn more about How to effectively establish business credit, read this article about Best Ways to Build Business Credit.
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