How small-business credit scores are calculated

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April 27, 2017 | Updated September 25, 2017


Key Points

Basics of business credit scores

  • Equifax, Experian and Dun & Bradstreet are the business credit bureaus in the U.S.
  • Each bureau applies its own scoring model to generate credit scores.
  • FICO uses its own scoring model to generate the FICO SBSS, the business credit score that the SBA uses.

Just as individual consumers have credit scores that demonstrate their ability to repay debt, so too do small businesses. As credit scores are a driving factor behind a business’ loan eligibility, it is important to understand how they are calculated and what you can do to improve your business credit score. Each company is evaluated with credit reports detailing its financial and borrowing behavior, and credit scores are calculated based on those reports.

While personal and business credit reports are created separately, they influence each other in several ways. An owner’s personal credit score is often factored into the credit score of his small business, as lenders assume an individual’s financial behavior will be extended to the way the owner does business. Owners are often expected to extend a personal guarantee to back a business loan. Thus, keeping track of both your personal credit and small-business credit is important to improving the chances of obtaining a business loan.

Business credit reports vs. scores

A small-business credit report records a company’s debts, bills, trade credit and accounts receivable. This information is reported to the credit bureau by suppliers, vendors, state agencies and legal authorities, among others. A credit report also gathers information on a company’s size, scope and time in business. The three primary credit bureaus in the U.S. that compile business reports are Dun & Bradstreet, Equifax and Experian.

A small-business credit score is a numerical figure derived from information in a small-business credit report. Each of the three credit bureaus has its own credit scoring model. Analytics company FICO also has a scoring model, called the FICO Small Business Scoring Service (SBSS), based on information from the credit bureaus.

Dun & Bradstreet, Equifax and Experian

The Dun & Bradstreet PAYDEX score represents how punctual a company is when making payments. It is calculated based on payment information provided by vendors and suppliers. Positive and negative payment behavior reported by suppliers will influence the strength of this score. If your suppliers fail to report your payment behavior, you lose an important opportunity to improve your score. 

The Equifax Business Credit Report illustrates a company’s credit usage and history, payment trends and frequency of on-time payments. It also evaluates the risk of becoming delinquent or going out of business. Equifax’s primary source of information is the Small Business Finance Exchange — an association of small-business lenders — but it also evaluates trade credit and public records.

Experian’s Intelliscore Plus weighs time in business, credit history, financial balances, liens and judgements, as well as bankruptcies. It also provides a commercial, blended and owner-only calculation, depending on how heavily the lender wishes to weigh the borrower’s personal credit history in their evaluation.


The FICO SBSS evaluates creditworthiness on a scale of 0 to 300, with a higher number indicating stronger credit. When seeking a loan, a borrower applies to a lender for a FICO SBSS score. The lender submits the application to FICO, which draws on data from the three business credit reporting bureaus and uses a proprietary algorithm to generate a small-business credit score.

The FICO SBSS evaluates the owner’s personal credit history alongside the company’s credit history. It also reviews time in business, liens and judgements, as well as financial data such as cash flow, revenue, assets and liabilities. Lenders also have the option of adding, removing and deciding the weight of certain information or credit bureau data in the algorithm.

The FICO SBSS has become an increasingly popular evaluation tool for lenders since the U.S. Small Business Administration (SBA) began using it in 2014 to assess eligibility for its SBA 7(a) family of loans. The maximum SBSS credit score a brand-new business with no credit history could obtain is 140, and this is the SBA minimum for a loan. Many conventional lenders require at least a score of 160.

Improving business credit

Small-business credit scores are less volatile than personal credit scores. However, this means it takes longer for a business to improve its credit score when compared to an individual’s scores.

Ensure your business makes all monthly payments on time, and avoid carrying a balance. Contact your vendors and suppliers to see if they report your timely payments to the credit bureaus, as good, steady payment behavior can improve your credit score, even if there are a few delinquent payments. Maintain credit lines to establish history and use about 20 percent of each to continue building credit usage, both factors that will influence your business credit score.

It is also worth pulling credit reports regularly to check for errors, which are more common in business credit reporting due to the multiple channels that provide information. Keep in mind, however, that credit bureaus charge businesses to access their small-business credit reports. Paying down debts and sustaining reliable day-to-day payment behavior is the best way to improve small-business credit.

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