If your business has credit cards you probably have a credit score for your business as well. Businesses who have higher credit scores are going to have easier times getting better rates on small-business loans or lower payments if they are seeking insurance for their business.
The following will discuss all the information you need to know about your small business and your credit score as well as what it will allow your limit you in doing:
What is a Business Credit Score?
A business credit score is similar to a personal credit score. These scores are also measured in a similar way to the way FICO measures your personal credit scores. The company’s credit score will represent the credit worthiness of your company just as your own personal credit score represents yours. The score will be used by a bank or lender when they are trying to determine if your business will pay back the loan they are giving you in a timely manner. It’s used to calculate the risks they run providing your company with a business loan.
Business credit scores will range from 0 to 100. Making your payments on time is the best way to raise this score.
Why Do I Need a Business Credit Score?
For a new business, credit scores are often used as a way to get loans and borrow money to help make the business grow. If your company is more mature, separating your business’s credit might seem silly. However, if you have a solid business credit score and rates on insurance policies are lower for those who have good credit. Keeping your personal credit separate from your business ensures your business’s success even if your personal credit isn’t the greatest.
How is a Business Credit Score Calculated?
Each of the 3 big credit bureaus for business has a score for your business and those 3 big credit bureaus are: Dun & Bradstreet, Equifax, & Experian. Each will collect and verify your business data individually. If you find information is incorrect from any report, you can generally call the bureau to have them fix the information. Providing proof of mistakes will generally fix the problem.
How Do I Go About Protecting My Business’s Credit?
Protecting your business’s credit is vital to your livelihood and the well-being of your business. Placing an alert on your business’s credit is always a good idea. This requires companies to contact you to verify your identity before assuming your credit report is indeed yours. This helps you protect yourself against issues like Equifax experienced when they had a massive data breach in 2017, which impacted many small businesses and their company’s private information. If you think your information may be compromised putting a freeze on your credit till the situation is cleared up can protect you further.
For more information on your small business’s credit and protecting your business’s information, please feel free to contact the 5 Star Funding Group for more information.