What Makes Up a Commercial Credit Score?
UNDERSTANDING THE FINANCIAL HEALTH OF A BUSINESS IS CRUCIAL FOR ANY BUSINESS OWNER OR INDIVIDUAL interested in starting a business of their own. Garnering and maintaining a good credit score is a key component to gaining access to credit for any business, no matter the size.
New business formation has exploded over the past several years, and with more than 33 million small businesses operating in the U.S., the competition for capital has become fierce. If small business owners are going to remain competitive, it’s more important than ever to understand how to create and maintain an optimal business credit score.
So, let’s start with the first step, which is understanding what’s included in a business credit report.
Company Profile – key information such as company name, address, and phone numbers
Credit Summary – synopsis of the business' credit accounts with banks, suppliers, and service providers
Public Records – Secretary of State business registration, judgments, liens, or bankruptcies reported for the business
Payment Trend and Payment Index – a 12-month payment trend and comparison to the industry norm
Risk Score - also known as your business credit score, the risk score is an assessment of the businesses financial stability
Why is this Helpful?
Shows key identification and performance information of your business
Provides an indicator of credit quality and capacity to pay back a loan
Summarizes borrowing history and public record information with a predictive score
Enhances a business’s ability to gain access to capital through accurate and efficient data access
Business owners and leaders can help maintain and optimize their business’s credit score by taking these steps:
Initiate banking relationships early
Responsibly use leases and corporate credit cards to help establish history and build credit
Demonstrate the continued ability to repay debt
Each month, Equifax produces a Small Business Indices report, which helps businesses track changes in the small business marketplace by providing insights into lending, default, and delinquency trends.