Why You Should Check Your Business Credit Score

Ann Marie Smith

Oct 4, 2021

An excellent credit score demonstrates that you made good financial business decisions, such as keeping your debt low, paying your bills on time, and using credit responsibly. Lenders are more confident you will make your payments on time and pay them back in full. Lenders therefore usually charge you a lower interest rate and offer better terms.

If you have a poor credit score due to significant debt, missed or late payments in your credit history, or liens and bankruptcies in your past, lenders are taking a bigger risk when extending credit or approving a loan. If you have struggled to pay back your debts in the past, it may indicate you will have similar problems in the future.

You should check your business credit score so you know what others see when they look at your business credit report. You can see your score at Command Credit. In just a few minutes, you can check business credit score reports and download them instantly with our self-service portal.

Here are five specific reasons you should check your business credit score regularly.

1. Applying for a Business Loan

According to the Federal Reserve Bank, there are two main reasons businesses are turned down for financing: too much current debt or low credit scores. Before applying for a loan, check business credit score reports to ensure your score is high enough for consideration.

Banks, credit unions, and other lenders will pull your business credit report to check your business financial health and credit history. The first thing they will look at is your business score. If you are applying for a Small Business Administration (SBA) loan, your application will not even be sent to the loan guaranty processing center if you do not meet minimum business score levels.

When you apply for a business loan, lenders make credit decisions based on several factors. While funding costs for lenders and the cost of servicing a loan are fairly fixed, the variable in interest rates comes from the risk assessment. The higher your credit score, the better rates you may qualify for.

Business loans are generally based on the prime interest rate, with additional points added based on your credit score and risk.

2. Applying for Credit

If you plan to ask for credit from other businesses, such as your suppliers or vendors, it is a good idea to check your business credit score first. When you have good credit, you are more likely to get more favorable terms and higher credit limits.

For example, you may be able to negotiate net-30 for payments rather than invoices due on demand. This can extend the length of time you have to pay your bills, which can, in turn, improve your cash flow.

3. Building Your Credit Profile

If your business is relatively new or you have had trouble paying your debts on time in the past, your business credit score will be negatively impacted. By pulling a business credit report, you can see the underlying factors that impact your business credit score so you can see what you need to do to improve it. This can be especially important if you are close to moving from one level of credit risk to another.

For example, the Experian IntelliScore Plus business credit score assigns risk classes based on your credit score ranging from one to 100.

  • Low Credit Risk: 76-100
  • Low-Medium Credit Risk: 51-75
  • Medium Credit Risk: 26-50
  • High-Medium Credit Risk: 11-25
  • High Credit Risk: 1-10

If your Experian business credit score is one risk category and you can move it up a few points to the next level, it can make a difference in the rates and terms you may get.

4. Looking for Mistakes or Fraud

You should also check your business credit score regularly to look for errors or signs of potential fraud. If you are paying your bills on time and your business is healthy, but you notice a significant drop in your credit score, it can indicate a mistake or fraud.

The FBI said the cybercriminals went on an “internet crime spree” over the past year. One growing area of cybercrime is business identity theft. Criminals steal your business identity and use it to open up fraudulent loans and business credit cards in your name. Checking your business credit score regularly can help you spot fraud more quickly.

5. Getting Better Insurance Rates

Lenders are not the only ones that check business credit score ratings. Most insurance providers will pull business credit reports to evaluate your business and to assess risk on new policies and renewals. Businesses with good credit tend to file fewer claims and pay their bills on time, so there is less risk for insurers.

Check Business Credit Score

Ready to check your business credit score? Go to Command Credit and click on Self-Serve Business Credit Reports to get started.