It is important to maintain a good business credit score, especially when you’re planning a startup. As a small business owner, you’ll need cash initially and having a good business credit score can help you get a loan quickly. The reason being, you’ll need cash on hand to manage business expenses, such as equipment cost, inventory, payroll, and advertising. Besides, if you want to apply for financing, a decent business credit score can help a great deal.
Most lenders will review your credit score alongside your loan application and consumer credit. Depending on your current financial standing, they would show their interest in shaking hands with you. With that said, it is equally important to know what is a good business credit score so that it helps you in your B2B service transactions.
- What is a good business credit score?
- Benefits of a Good Business Credit Score
What is a good business credit score?
Business credit scores range from 0 to 100; however, it is to be noted that different business credit bureaus have different scoring models. That said, let us understand from the perspective of the most popular credit reporting agencies about having a good credit report.
If you’re checking your business credit score through Experian, you’re required to be in the range of credit score between 76 and 100. The high-risk score here is between 1 and 10, and if you fall in the latter category, you’ll need to improve your score when planning to open a B2B solutions firm.
You can obtain your credit information report through CreditQ. A single credit report can help find the business defaulters so that you can make an informed decision.
FICO SBSS considers a higher score to be good instead of a lower score. On a scale of 0 and 300, you should try to maintain a score of at least 160 to apply for bank financing.
For Dun & Bradstreet PAYDEX, your score should fall between 80 and 100 for business purposes. However, if your score is anywhere between 49 and 100, it is considered a bad rating, which means you’ll have to regularize your payment methods to improve your score.
With Equifax, your credit score should fall between 100 to 992 that provides a good overview of your business’s credit history. While the payment index should show somewhere closer to 100 – it reflects your billing details and how you manage your finances.
Benefits of a Good Business Credit Score
You can apply for a loan easily
It is understood that excellent business credit scores can help you avail of the loan facility without trouble. Lenders hesitate to lend money to B2B services with poor credit history; they fear untimely payment routine. That’s why you must maintain a good score so that you get your business loan sanction in no time.
You can protect your personal finances
When you’re opening a startup offering B2B solutions, you’re likely to merge your personal and business finances to keep the business running. But you can avoid this hustle with a good business credit score. Your company debts can be reported on your business credit report; thus, you can save or manage your personal credit rating for other transactions. The lender is likely to check your personal credit score along with your business credit report.
You can get easy access to cash for expansion purposes
To cater to B2B services, you need money all the time. Although your business meets the cash requirement, it is always good to have a backup option if things don’t go as planned. If you wish to expand your business soon, you’ll have easy loan access to manage equipment and inventory.
You enjoy better loan terms
Lenders seek trustworthy business partners. With a good business credit score, you’re sure to avail of favorable loan terms for your business. Therefore, you should consider creditworthiness when applying for a loan. You can negotiate lower interest and large credit limits, owing to a good score.
How to achieve a good business credit score?
Now that you know the importance of having a good business credit score, you should also know how to maintain a good credit score.
Pay off your existing debt
As a startup offering B2B solutions, your business requires cash. To make things right, start by paying your existing debts. It will make room for cash through a loan, which you may require to expand your business. Repay debts of your vendors and take time to sort out your outstanding amounts so that you’ve financial liberty to plan business growth.
Check your scores regularly
Amidst creating strategies, you may ignore checking your credit score, and it would cost you some effort at the last minute. To avoid the hassle, we recommend checking your scores frequently so that you know where you stand in your financial obligations.
Make timely payments
There is a difference between repaying debts and making timely payments. When you make timely payments to your vendors, you create a trusted rapport with them, and it may work in your favor in the long run.
To know your credit information report or know about your credit defaulters, you can visit CreditQ that works with MSME and businessmen to help them with their financial dealings.