How Important is a Business Credit Score?

Business Credit Score, High-Risk Merchant


      Many business owners are familiar with their personal credit scores, but business credit scores remain a mystery. Establishing a healthy score assists in securing substantial loans, better insurance rates, and much more. Whether you are a high-risk merchant or not, if you are launching a start-up, understanding the importance of a business credit score can put you on the path to success!

      What is a Business Credit Score?

      A business score uses the same logic as a personal score. It is calculated by business credit reporting agencies such as Equifax Small Business, Dun & Bradstreet, and Experian Business. The agencies gather business financial data,  assess it,  and determine your risk level. A variety of institutions use this score when determining your risk before bringing your business on as a customer.

      The Difference Between Personal and Business Credit Scores

      Though they share a lot of similarities, there are distinctions between a personal and business score. Significant differences to include:

      • Individual credit scores are measured on a scale of 300-850. Business scores range from 1-100. A score of 75 and over is considered an excellent company score.
      • An individual’s social security number tracks personal credit scores. Business scores are followed by the employer identification number, address, or name, depending on the reporting agency.
      • Personal credit scores are confidential. Business scores are available to the public and are easily obtained by paying a small fee.

      Four Ways to Guarantee an Excellent Business Credit Score

      A reliable business credit score benefits your company in many ways. Paying less interest on a loan or qualifying for lower insurance rates are two substantial reasons to make sure your business credit score remains in check. Looking to increase your business’ credit score? Heed this advice.

      1. Pay company bills on time and know which businesses report your payment activity.
      2. Reduce company debt and do not take out excessive loans amounts unless necessary.
      3. Check your business score quarterly and disrupt errors immediately.
      4. Avoid business tax liens.

      Maintaining an Above Par Business Score as a High-Risk Merchant

      Most merchants don’t realize they have an unhealthy business credit score until they are denied access to a product or service. There is so little information around the subject; it is easy to overlook maintaining a high score until it’s too late. As a high-risk merchant, you are already fighting an uphill battle on many fronts to establishing legitimacy. Having a low business score can potentially put the nail in the coffin when push comes to shove.

      Make sure from the first day your business opens; you are aware of your company score. As a high-risk merchant, an excellent rating can open up several doors for your business:

      • Qualify for a business loan. Being a high-risk merchant is reason enough for lenders to disqualify a loan application. With a solid company rating, you increase the chances of receiving a yes.
      • Receive favorable loan terms. It’s simple enough – a good business credit score equates to lower interest rates.
      • Protect personal finances. Even if running a sole proprietorship, it’s always advisable to keep your personal and business finances distinct and separate from each other. Should you face financial challenges in your business, your credit score remains safe.
      • Gain favor with suppliers. With a solid score, suppliers will extend items on credit more quickly.
      • Create room for growth. You might not need it now, but eventually, your high-risk business will expand. A high score means you can grow when needed quickly.

      Final Thoughts

      We hope these tips opened your eyes to the importance of maintaining a solid business credit score. It’s never fun to pay more than you should due to a few late paid bills. Are you looking to discuss high-risk merchant opportunities or even obtain a business loan? Give Payment Savvy a shout today. We are always on hand to provide you premier and innovative solutions for your high-risk business.

      Chad Deatherage

      Chad Deatherage

      Chad is a serial entrepreneur and founded Payment Savvy in 2011 armed with the goal of providing high-risk establishments with a pioneering and tailored payment processing solution that allows them to flourish. Having decades of knowledge in the financial services and debt recovery industries, he ensures every client receives the same level of expertise, resourcefulness, and strategic vision no matter the size of the organization. Always willing to push the envelope, Chad’s forward-thinking and leadership skills are responsible for Payment Savvy being on the map as an industry-leading payment processor.