Business credit-a loan or line of credit extended to a corporation or LLC-can be used for the acquisition of additional products or equipment, working capital, real estate, software...
any number of uses that can help to maintain or grow your business.
But just as with personal credit, lenders of business credit rely on a set of criteria and scores reported by different business credit bureaus.
And just like your personal credit, these scores tell a story to a lender that often determines whether or not your business is eligible for credit, and if so, how favorable your payment terms will be.
The biggest difference between personal and business? Business credit must be earned, and is reported (rated) through one of the following business credit bureaus: Payquo (Client Checker): Scores range from 20 to 90, and score of 80+ is considered great.
This score is based on payment history reported by vendors only.
You will need at least three trades before generating a score with Payquo.
DUNS (Dun and Bradstreet - D&B): Company size and revenue, vendor payment history, lender payment history and more-all are taken into account to determine a D&B rating.
Generally a rating of 80 or above is considered good for the development of a "Paydex" score-a numerical value produced by D&B based on their rating of your business.
Paydex scores range from 0 to 100, with 80 being a solid goal.
You will need at least five trades to generate an average score from D&B.
Intelliscore (Experian): Like D&B, these scores range from 0 to 100, as well.
This score is based on payment experience reported by vendors AND lenders, plus most major financial institutions.
Strive for 80 on your Intelliscore, as some lenders will not lend below a score of 80.
Equifax Small Business Report: Perhaps the most detailed report of all the bureaus, the Equifax Report takes into account things like time in business, ability to repay, public records (charge-offs, judgments, etc.
against the business), as well as your payment history on various accounts, and a risk assessment of your outstanding account balances.
Scores generally range from 0-100 with a score of 80 being an ideal target for a business seeking credit.
We are clearly holding back a lot of information here-most notably a detailed and VITAL discussion of the "5 C's" of building business credit [http://www.
businessfinancegurus.
com/go/business-credit-central/establish-business-credit] these are the five specific measuring points virtually all lenders use to judge your business in conjunction with your credit bureau ratings.
But that's why our coursework exists, and how we can better help you as consultants should the need arise-including helping you establish your business with relevant credit bureaus.
Always remember that seeking business credit requires the same diligence-and understanding-of the different credit bureaus to position your business in the most positive business credit light.