For example, a 70 is indicative of an average 15 days beyond agreed terms. Scores below 80 are then progressively reflective of the number of days a company typically pays beyond agreed invoice terms. “A 90 indicates 20 days before, and an 80 indicates payment on time. “A perfect score of 100 indicates that the subject company typically pays 30 days before agreed terms or invoice payment due dates,” he said. There are many providers of business scores that are measured and scaled differently, so it can be confusing for small businesses to understand their scores.” Tells a different storyĪccording to Mike Ross, managing partner at commercial collection agency Miller, Ross & Goldman, a business credit score often reflects whether a business pays its vendors and creditors early, on time or late. On the business score side, there is not the same consistency you get with FICO. “Business credit scores, however, are typically determined by looking at payment history, amounts owed, length of credit history, credit mix and new credit. “Personal credit scores are determined through FICO’s algorithms based on your personal credit history,” he said. Scoring criteriaīusiness credit scores are also determined by a different (though sometimes overlapping) set of criteria than personal credit scores, said Luke Voiles, vice president and business leader of QuickBooks Capital at Intuit. You can fill out an online application for an EIN and get approved in seconds. A personal credit score is tied to your Social Security number. Here’s a look at some more: Accessīusiness credit scores are publicly available, unlike private personal credit scores, and are attached via an employer identification number (EIN). But that is not the only difference between the two. If the business can’t pay back a loan, it won’t affect the owner’s personal credit score. A business credit score does not impact one’s personal FICO score, for one. While the concept behind a business credit score and a personal credit score is similar, they are distinct. How is a business credit score different from a personal credit score? FICO scoreĮditor’s note: Looking for a small business loan? Fill out the questionnaire below to have our vendor partners contact you about your needs. This chart lays out the FICO score ranges and ratings. For example, our review of Biz2Credit found that those in need of a loan must have a credit score of at least 660. Most of the best small business lenders accept credit scores of 500 and up. Most lenders consider a credit score of 670 or higher to be good. FICO score rangesįICO scores range from 250 to 900. The higher your score, the greater your chances of getting approved for a loan and the lower your interest rate will be. It helps companies make quick lending decisions. Your score dictates the type of business loan you can get, as well as how much you can borrow, for how long and at what cost. Lenders use it to determine your creditworthiness and how likely you are to repay a loan. What is FICO?įICO is a three-digit score determined by activity on your credit reports. “Each credit bureau will collect data and information about a company’s financial history and attach a score, but each bureau has a different set of criteria they value when attaching a score,” Jeffrey Bumbales, director of strategic partnerships and marketing at online lender Credibly, told. Strong business credit and a responsible payment history can also reduce the cost of borrowing money. The scores determine creditworthiness for several things, including business loans, credit cards and payment terms. Three major credit bureaus determine business credit scores: Dun & Bradstreet, Equifax, and Experian. Like personal credit scores, a business credit score is a numerical measure representing a business’s creditworthiness, but the scale is 0 to 100. Basically, a business credit score is used to demonstrate how financially sound and reliable a business is, as well as how likely it is to make its owed payments on time. Your business credit score, while distinct from your personal credit score, is similar in concept. While the concept behind each credit score is similar, there are significant differences every business owner should understand. A business credit score measures the overall creditworthiness of a business, much like a personal credit score measures the overall creditworthiness of an individual.
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