Demystifying Business Credit Scores: How To Understand The Credit Score Models

Written by Pierre

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Are you feeling overwhelmed by the complexities of business credit scores? You’re not alone! In this article, we’ll demystify business credit scores and help you understand the credit score models used by the major credit bureaus. By gaining a deeper understanding of these models, you’ll be better equipped to make informed decisions about your business’s financial health. So, let’s dive in!

How to Understand the Credit Score Models

There are several business credit scoring models used by different credit bureaus. The four primary models are:

  • Dun & Bradstreet PAYDEX Score
  • Experian Intelliscore Plus℠
  • Equifax Business Credit Risk Score℠
  • FICO® Small Business Scoring Service℠

Let’s explore each of these models in more detail.

Dun & Bradstreet PAYDEX Score

The PAYDEX Score, developed by Dun & Bradstreet, is a numerical score ranging from 0 to 100, with higher scores indicating better creditworthiness. This model primarily focuses on your business’s payment history, specifically how promptly you pay your bills. A score of 80 or above is generally considered good. For more information on obtaining a DUNS number and establishing a business credit profile with Dun & Bradstreet, check out our article on establishing and building business credit.

Experian Intelliscore Plus℠

Experian’s Intelliscore Plus℠ is another popular business credit scoring model, with scores ranging from 1 to 100. Like the PAYDEX Score, higher scores indicate lower credit risk. This model considers multiple factors, including payment history, credit utilization, length of credit history, and public records. To learn more about the factors affecting business credit scores, head over to our business credit basics article.

Equifax Business Credit Risk Score℠

Equifax’s Business Credit Risk Score℠ ranges from 101 to 992, with higher scores indicating lower risk. This model takes into account your business’s credit history, financial history, and public records. It’s essential to monitor your Equifax business credit report regularly to ensure accuracy, as outlined in our guide on understanding and improving business credit scores.

FICO® Small Business Scoring Service℠

FICO® Small Business Scoring Service℠, or FICO SBSS℠, is a credit scoring model developed by FICO specifically for small businesses. Scores range from 0 to 300, and higher scores indicate lower risk. FICO SBSS℠ is unique in that it considers both personal and business credit data, making it essential for small business owners to maintain good personal credit as well. Learn more about the importance of personal credit in our business credit basics article.

Why Understanding the Credit Score Models Matters

Understanding the different business credit scoring models is crucial for several reasons:

  1. Make informed decisions: By knowing how your business credit scores are calculated, you can make strategic decisions to improve your creditworthiness and secure better terms on loans and credit accounts.
  2. Monitor progress: Understanding the models helps you track your progress in building a strong business credit profile, allowing you to identify areas for improvement.
  3. Resolve issues: Familiarity with the factors that affect your credit scores can help you identify and resolve any issues that may be negatively impacting your scores.

External Resources

For additional information on business credit scores and the various credit score models, consider exploring these external resources:

Wrapping Up

Demystifying business credit scores and understanding the credit score models is an essential aspect of managing your business’s financial health. By familiarizing yourself with the different models and factors that impact your scores, you can make informed decisions and work towards building a strong credit profile. Be sure to check out the other articles in our business credit series for more valuable insights and tips on managing your business credit!

Read More Articles:

Want Big Loans? Find Out How Business Credit Scores Affect Loan Terms

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