Understanding Business Credit Scores

Business credit, also known as trade or commercial credit, is the single largest source of lending in the world. There are a number of benefits associated with establishing business credit, such as limiting personal liability, maximizing financing opportunities, and improving corporate cash flow.

Three credit bureaus are primarily responsible for monitoring business credit: Dun & Bradstreet, Experian, and Equifax. Each credit bureau gathers information from sources such as vendors, banks, business credit card issuers, and data collection firms. Additionally, the credit bureaus produce business credit scores, which serve as a proxy for a company’s ability to repay its debts. Below is a brief overview of the risk assessment products used by each credit bureau.

Dun & Bradstreet

Dun & Bradstreet evaluates a company’s risk using a PAYDEX score, ranging from 0 to 100. To establish a credit profile with Dun & Bradstreet, a business must file for a free D-U-N-S number through the company’s website, and the bureau must have records of payments with at least four vendors. The PAYDEX score represents an analysis of a company’s one-year payment history, together with a credit score and a financial stress score. The scores mostly reflect whether a business makes payments on time or ahead of schedule. A higher score indicates greater creditworthiness. Typically, a score above 80 identifies a business with low risk of late payments, 50-79 is medium risk, and anything below 50 is high risk.


Experian business credit scores employ multiple factors to measure a company’s risk level. In addition to payment history, Experian examines legal filings, public records, and collection agency data to determine a company’s credit quality. Experian also considers information that compares one company’s payment history to that of others in its industry. Ranging from 1 to 100, a score between 75 and 100 is considered excellent. Fifty to 75 is average. A score that falls into the 25-to-50 range is labeled as medium risk. Ten to 25 is medium-high risk, and anything below 10 is considered high risk.


Equifax offers three different assessments for businesses: the payment index, the credit risk score, and the business failure score. Similar to a PAYDEX score, Equifax’s payment index is measured on a scale of 100, and it reflects payment history. The credit risk score includes one score for banks and another for suppliers. The Small Business Credit Risk Score for Financial Services ranges from 101 through 992, and a score above 566 is considered acceptable. The Small Business Credit Risk Score for Suppliers ranges from 101 to 816. A score above 539 indicates a low likelihood of payment delinquency over the next 12 months. The business failure score measures the likelihood of a business closing. It ranges from 1,000 to 1,880.


For business owners, taking steps to separate their personal and business credit is a smart strategy. There are many factors that affect a business credit score including payment history, credit utilization, age and size of credit profile, and frequency of inquiries. As a company plans to expand, establishing good business credit will be helpful in determining whether a company qualifies for business financing.