Business credit is a way for potential lenders, vendors, suppliers, and others to evaluate a business’ creditworthiness.
More On Business Credit
Business credit is a way for potential lenders, vendors, suppliers, and others to evaluate a business’ creditworthiness, or how likely the business is to pay future debts in a responsible manner based on past actions.
Business credit is measured with a numerical score from zero to 100, with 100 representing perfect credit. A score over 80 is considered good.
Three private agencies, Dun & Bradstreet, Equifax, and Experian gather information on companies and their payment histories from banks, lenders, vendors, public records, and other sources to determine business credit scores.
Business credit is linked to a business via its tax ID number, just as an individual’s credit is tied to his Social Security number. It can be in a business owner’s best interest to establish credit for his business separate from his personal credit to help limit personal liabilities and to position the company to take advantage of certain financial opportunities that require a robust business credit score.