What Is Business Credit & How Does Business Credit Work?

When you make a major purchase, or apply for financing, you usually have to go through a personal credit check so that lenders can decide whether or not you should be trusted and approved.

Well, the same process happens when you make major purchases or apply for financing for your business. Lenders check your business credit to determine how trustworthy you are as a business.

Unfortunately though, most business owners don’t realize that they even have a business credit profile, and even fewer know how to check their business credit score. This means that most business owners are still using their personal credit and social security number to qualify for loans, and if they have poor personal credit, they can’t qualify for a business loan at all.

At Oxford Pierpont Financial, we help business owners build strong business credit so that they can qualify for the major financing options that will grow their businesses. Once we have helped you build your business credit, we give you access to hundreds of lenders that can give you the money your business needs to grow exponentially.

We are here to help! Contact our Finance Team to get started with a free business credit check today!

Free Business Credit Scores & Reports

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What is a Business Credit Score?

Similar to a Personal Credit Score, Business Credit Scores indicate the creditworthiness of a business.

  • Business credit scores range from 0 to 100.
  • The major business credit reporting agencies are Dun & Bradstreet, Experian, and Equifax.
  • Paying on time to lenders and/or creditors is the best thing you can do to establish a good business credit score.
  • Anyone can check a businesses’ credit scores, unlike consumer scores which are restricted to anyone with a “permissible purpose” under federal law.
  • Studies show that as many as 25% of business credit reports may contain errors or are missing key information.

Factors that determine business credit scores

There are 5 key factors that may be used to calculate your business credit scores. Each scoring model is different though, so some of these factors may not carry much weight, or may not be used at all.

  • Payment history (Most Important)
  • Age of credit history
  • Debt and debt usage
  • Industry risk
  • Company size

See how lenders view your business data so that you can qualify for business financing.

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How Are Business Credit Scores Used?

To determine your borrowing power.

Your business credit report and score can determine how much financing you are able to secure. The more financing your business has access to, the more your business can grow!

To determine your rates on business insurance

Some insurance providers evaluate a business owner’s credit as well as the business’s credit to determine rates on commercial insurance. For some businesses, this can be a major factor in whether or not you can operate at all.

To get more time to pay.

Vendors and suppliers may look at a business’s credit reports or scores to decide how long to give the business before payment is due for goods and services. Securing longer terms on your terms with suppliers is a great way to increase financial flexibility and improve cash flow.

Get Your Free Business Credit Scores Today

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