• Retirement and Annuity Advisor Jennifer Lang

Ways That Can Help You Improve Your Business Credit Score

At JenniferLangFinancialServices.com, we help small businesses apply for financing through our network of banks including SBA loans, Bank Term loans, and more financing options. When we interview small business owners who have been funded, we ask if they have tips for others seeking a business loan. Many say to pay very close attention to your business credit score, keeping them high.

As a consumer, your personal credit score is important when shopping for a home mortgage, buying a car, or applying for a credit card. These personal credit scores don’t tell the whole story of your business. The other score you need to be on top of is your business credit score, also known as the FICO SBSS score.

Why is the FICO® SBSS Business Credit Score Important?

When applying for an SBA loan through our bank partners, your FICO SBSS score will be considered. FICO stands for the Fair Isaac Corporation, the largest and best known of several companies that calculate credit scores. SBSS stands for the Small Business Scoring Service.

This score is one factor that helps lenders determine how likely your business is to make timely loan payments and ultimately pay back the loan in full.

How is the FICO SBSS Score Calculated?

In short, your FICO SBSS score is calculated by reviewing personal and business credit history. Other business financial information also comes into play like the age of your business, number of employees along with financial data, like revenue and assets.

The SBSS score ranges from 0-300 with the higher your score, the better.

Why Would You Want to Improve Your Business Credit Score?

According to the Small Business Administration (SBA), insufficient or delayed financing is the second most common reason for business failure. Because anyone can view your business credit score—it’s not confidential—it’s important to establish business credit from the start to help you obtain better interest rates, loan terms, and negotiation leverage on payment periods with suppliers.

8 Ways to Improve Your Business Credit Score

If your business credit score needs work, review these 8 strategies to help strengthen yours.

Check your business credit report

There’s no shortage of sites online to get your personal credit score but you might not know where to go for your business credit score. If you find any errors, dispute them immediately. Incorrect information can impact running your business.

Pay your bills on time

This step is a no brainer. Lenders or vendors don’t want to work with a business that drags their feet when paying bills. Use these strategies to avoid paying late and incurring penalties.

  • Make a list of every bill

  • Find out when your payments are due

  • Add your payments to a calendar

  • Decide how much you want to pay

  • Set up automated payments whenever possible

  • Devise a system for manual payments

  • Sign up for reminders

If you’re unable to make a timely payment, see if you can negotiate so your business doesn’t get reported to the credit bureaus.

Decrease your credit utilization ratio

The credit utilization ration is explained by credit site The Balance as the ratio of your credit card balances to credit limits. It measures the amount of your credit limit that's being used. For example, if your balance is $300 and your credit limit is $1,000, then your credit utilization for that credit card is 30%. The lower your credit utilization, the better.

Establish credit accounts with suppliers

If you work with vendors or suppliers, you can build your business credit by opening accounts with them. Before you do, make sure they report payments to credit bureaus. That way, your timely payments will be reflected on your credit reports and lenders will have access to them.

Add positive payment experiences to your credit file

The credit card issuers and lenders you have accounts with send accounts updates to credit bureaus including your current balance, payment history, and other details. This information is added into your credit report and used to generate your credit score when it's requested by businesses and yourself.