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If you’re a business owner, establishing business credit can help safeguard your personal credit, secure competitive loans, obtain better insurance rates, and more. While business credit scores are similar to personal credit scores, there are some key differences. This guide will walk you through everything you need to know.
A business credit report is a comprehensive summary of your business’s credit history, similar to a personal credit report, which provides a snapshot of individual credit use. Lenders use the information in your business credit report to assess the likelihood that you will repay credit extended to you.
According to the Small Business Administration (SBA), a typical business credit report includes:
Number of employees, sales, ownership, and subsidiaries
Business registration and operational information
Industry classification
Public filings (e.g., liens, judgments)
Payment history and collections
What’s on your business credit report can significantly affect your business’s financial health. The SBA notes that interest rates, repayment terms, insurance premiums, and the credit you receive from banks and suppliers can all be influenced by your business credit report.
Dun & Bradstreet (D&B) PAYDEX Score and Experian Intelliscore Plus are two prominent business credit scoring models. These scores range from 1 to 100, with higher scores indicating better creditworthiness. In contrast, consumer FICO Scores range from 300 to 850, with a score of 800 and above considered exceptional credit.
By creating a free account with Nav, you are able to immediately see your business credit standing with summary information from Experian and Equifax on your business credit. You also get access to your Experian personal score for free.
By upgrading to Nav Prime, you’re able to get the most comprehensive view into your detailed business and personal credit health, with business data from Experian & Equifax and personal data from Experian & TransUnion. Additionally, Nav Prime gives you access to up to two tradelines with Nav for building business credit.
While there are numerous free credit score and report resources available for consumers, finding similar resources for businesses can be more challenging. Some free business credit score resources exist, but they may not provide a comprehensive picture compared to paid services.
Unfortunately, services that allow you to add extra information to your credit report and potentially boost your score are typically only available for consumer credit reports. For example, Experian Boost™ can help improve your personal credit score by including payments to utility companies or streaming services, but it won’t affect your business credit history.
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5 Steps to Building Business Credit
Make Sure Your Business is Legally Registered
Incorporate or form an LLC and obtain a federal employer identification number (EIN). Business credit reporting agencies often use your EIN to track your business credit instead of your Social Security number.
Get a Business Credit Card and a Business Bank Account
Use your business credit card solely for business expenses and your personal credit card for personal expenses to simplify tax reporting. Follow good credit card practices such as keeping your credit utilization low and making consistent, on-time payments.
Work with Vendors that Report Payments to Business Credit Bureaus
Confirm whether your vendors report payments to the credit bureaus. Prioritize working with vendors who do, as this can help build your business credit.
Pay on Time — or Better Yet, Early
Late payments can significantly damage your business credit scores. Paying early is even more beneficial. The Dun & Bradstreet PAYDEX® score, for instance, awards its highest score only if you pay vendors early.
Check Your Scores Regularly
Regularly monitor your business credit scores from Dun & Bradstreet, Equifax Business, and Experian Business. Although there may be a cost involved, it’s important to keep track of your scores, especially if you’re planning to apply for a business loan soon.
Nav will report up to two business tradelines for you when you have Nav Prime. Your first tradeline is automatically reported monthly from your Nav Prime membership payments. Your second tradeline is automatically reported monthly once approved for the Nav Prime Card.
Disclosure would be needed at bottom of page:
Nav Technologies, Inc. is a financial technology company and not a bank. Banking services provided by Blue Ridge Bank, N.A., and Thread Bank, Members FDIC. The Nav Visa® Business Debit Card is issued by Blue Ridge Bank, N.A. or Thread Bank, and the Nav Prime Charge Card is issued by Thread Bank pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa cards are accepted. See Cardholder Terms for additional details.
As with your personal credit scores, it’s important to check your business credit scores regularly, as the credit bureaus can make mistakes or have incorrect information on your reports.
“Your business could get mixed up with that of another, which could mean negative information from another business is mixed with yours,” Detweiler says. “Or information such as UCC filings could be affecting your business credit and you don’t know it.”
Contacting the credit bureaus directly is the best way to resolve this type of discrepancy. If you’re able to prove that their information is incorrect, they will adjust the reports accordingly.
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