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What Is Business Credit?

Business credit is a measure of how creditworthy your business is in the eyes of banks and lenders.

So having a good business credit score can help your business get approved for that new loan, open (or expand) trade lines of credit with your suppliers/vendors or even to finally sign up that big customer you have been working with for the last several months.

But the business credit industry can seem unregulated, and business owners often don’t know how to get or improve their business credit scores.

Who uses business credit?

Many owners don’t realize that anyone can check their business credit at any time. It could be a potential client, a lender, a vendor, or a competitor. There are different rules about how business lending information and business credit information can be shared or kept private.

When you apply for a business loan, the bank doesn’t have to say if it used a copy of your business credit report, score, or index to make a decision. If businesses knew how easy it was to get a copy of their business credit reports and how limited or bad the scores could make them look, they would run to get a copy of their business credit reports.

What is included in a business credit report?

Business credit reports may include general information about the company, NAICS and SIC codes, the business’s history, industry risk, operational data, information about judgments and liens, and a company’s payment history.

The main business credit reporting agencies are TransUnion, Experian, and Equifax. Each credit bureau has its own database of information that comes from the company itself, public records, other credit reporting companies, or collections agencies.

Because all major business credit bureaus maintain separate databases, they have the potential to report different information. It is important to be aware of this and to review all three when monitoring your business credit.

Does a company need to build or maintain a business credit profile?

Having access to credit or cash is essential for the long-term success of a business.

So, it can be very helpful for a business to have a well-balanced and positive business credit profile. Many business owners and professionals think that if a company has credit, it will automatically be listed on their credit profile and affect their score.

This is not true at all. Many vendors, lenders, and creditors do not report to the bureaus, and it can be hard for businesses to figure out which ones do. Having a professional business credit expert guide and help build the right credit can give a company an edge when it comes to getting business loans approved with the best interest rates.