As a consumer, you’re likely familiar with the importance of building and maintaining a good personal credit score. What you might not realize is that businesses need to do the same.
While a business credit score is similar to a personal credit score, there are some key differences in how the score is put together. We’ll take a look at how a business credit score is constructed, the importance of a high score and what you can do to make sure your business has a strong credit profile.
When a consumer applies for credit, the lender will pull their credit score to determine if they’re a responsible borrower. A business credit score functions the same way. When a business owner needs to take out a loan or open a line of credit, the lender or service provider will typically check both their personal and business credit score to determine their eligibility.
Any type of business can have a business credit score, from a sole proprietorship to a corporation with thousands of employees. The only requirement is that the business has suppliers, vendors and lenders who regularly report account activity to a business credit bureau.