What is a good credit score to get a business loan?

Business loan is different from personal loan. However, many small business owners fail to know this, and that is why they fail to borrow their business loan. Even if you do not anticipate the need to borrow money for your small business, it is still important to start building your business credit score now.

Unlike personal credit scores which are calculated in a uniform manner, each business credit score has a different range and uses different criteria.

What is a Good Credit Score?

Business credit scores can be used to decide how safe it is to extend credit to customers or check the stability of vendors. Here are some guidelines for a good credit score for the above types:

  • D&B PAYDEX: Low risk 80-100
  • Experian Intelliscore PlusSM: Low risk 76-100
  • FICO SBSS: 160+
  • Personal credit scores: Good 700-749 / Excellent 750+

To qualify for a business loan, most lenders require a minimum 550+ personal credit score.

How to Start Generating a Business Credit Scoreļ¼Ÿ

Filing a DBA or obtaining a business license does not start your business credit file. Forming an LLC or corporation, opening a business bank account in your legal business name or having a listed telephone number in that name will create a business credit file.

Free methods for establishing a business credit file include:

  • Applying for a federal Employer Identification Number (FEIN) from the IRS
  • Obtaining a Dun & Bradstreet DUNs number

It is critical to always use exactly the same form of business name and the same exact address and phone number on everything you do for your business.

Create a place to keep that information and refer to it every time. This is critical for your business score and also for SEO rankings and branding and marketing your business.

Tips for Improving Your Business Credit Score

Now that you know how important your business credit score is to the future of your small business, use these tips to improve it:

  • Correct errors on your credit reports
  • Use auto-payments and reminders to pay your bills on time
  • Open a business credit card
  • Pay off existing debts, but do not close the accounts

Your goal is to use a low percentage of your available credit, ideally only 2-3%. By improving your business credit score, you improve your chances of being among those successful in finding financing to grow.

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Robin Bell

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