Jun 18, 2024
Travis Palmer

How Small Business Credit Scores Are Calculated: A Comprehensive Guide

A small business credit score is a crucial metric that lenders, suppliers, and other creditors use to assess your business's creditworthiness. Understanding how these scores are calculated can help you manage and improve your business credit, leading to better financing options and terms. This comprehensive guide will explain the factors influencing small business credit scores and how they are calculated.

1. Understanding Small Business Credit Scores

What is a Small Business Credit Score?

A small business credit score is a numerical representation of your business’s creditworthiness. It ranges from 0 to 100, with higher scores indicating lower risk to lenders and creditors.

Why is it Important?

  • Loan Approval: Lenders use credit scores to determine loan eligibility.
  • Interest Rates: Higher scores can lead to lower interest rates.
  • Vendor Terms: Suppliers may offer better terms to businesses with strong credit scores.

2. Major Business Credit Bureaus

Dun & Bradstreet (D&B)

  • Paydex Score: Ranges from 0 to 100, based on payment history.
  • Key Factors: Payment performance, trade experiences, and public records.

Experian Business

  • Intelliscore Plus: Ranges from 0 to 100, predicting the likelihood of serious credit delinquency.
  • Key Factors: Payment history, credit utilization, business age, and public records.

Equifax Business

  • Business Credit Risk Score: Ranges from 101 to 992, predicting the likelihood of business failure.
  • Key Factors: Payment trends, credit history, and demographic information.

3. Factors Influencing Small Business Credit Scores

Payment History

  • On-Time Payments: Consistently paying bills on time positively impacts your score.
  • Late Payments: Late or missed payments can significantly lower your score.
  • Delinquencies: Accounts in collections or severe delinquencies harm your credit score.

Credit Utilization

  • Credit Utilization Ratio: The percentage of your available credit you’re using.
  • Optimal Ratio: Keeping your credit utilization below 30% is generally considered favorable.

Length of Credit History

  • Business Age: Older businesses with a long credit history are seen as less risky.
  • Credit Accounts: The age of your credit accounts also impacts your score.

Public Records

  • Bankruptcies: Filing for bankruptcy can severely damage your credit score.
  • Liens and Judgments: Tax liens and court judgments against your business negatively affect your score.

Industry Risk

  • Industry Type: Some industries are considered higher risk, which can impact your score.
  • Economic Conditions: Current economic conditions in your industry can also affect your credit score.

Business Size and Financials

  • Revenue: Higher revenue and financial stability can positively impact your score.
  • Employee Count: The number of employees can also be a factor in your credit evaluation.

4. How to Improve Your Small Business Credit Score

Pay Bills on Time

  • Timely Payments: Ensure all bills and credit obligations are paid on time.
  • Automation: Set up automatic payments to avoid missed or late payments.

Monitor Your Credit Utilization

  • Manage Credit: Keep your credit utilization ratio below 30%.
  • Increase Limits: Request higher credit limits to improve your utilization ratio.

Establish a Credit History

  • Open Credit Accounts: Open credit accounts early and maintain them responsibly.
  • Use Credit Regularly: Regularly use your credit accounts and repay them on time.

Review Public Records

  • Resolve Issues: Address any liens, judgments, or bankruptcies promptly.
  • Dispute Errors: Regularly check your credit report for inaccuracies and dispute any errors.

Diversify Credit Types

  • Mix of Credit: Maintain a healthy mix of credit types, such as loans, credit lines, and trade credit.
  • Responsible Borrowing: Use different types of credit responsibly to build a diverse credit profile.

Regularly Monitor Your Credit Score

  • Credit Reports: Regularly review your credit reports from all three bureaus.
  • Monitoring Services: Consider using credit monitoring services to stay informed about changes in your credit score.


Understanding how small business credit scores are calculated can help you manage and improve your business credit. By focusing on timely payments, maintaining a low credit utilization ratio, establishing a solid credit history, addressing public records, and monitoring your credit score, you can enhance your creditworthiness. This, in turn, can lead to better financing options and terms, ultimately supporting your business's growth and success.

Ready to explore your funding options? Get offers today! Fill out an application with Approvd and discover the best funding solutions for your business. For more business, credit, and financial insights, visit our Approvd blog page.

About the Author

With over 20 years of experience in the business loan marketplace at Approvd, our expert has helped countless small business owners navigate the complexities of securing the right funding. Passionate about empowering entrepreneurs, our expert combines industry knowledge with a deep understanding of the challenges faced by small businesses today.

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