Small business credit score explained

If you own a small business, you may be wondering what credit scores have to do with your company. Not only do individuals have credit scores, but so do businesses. So what exactly is your business credit rating? And why should you make sure your business has a good credit score?

In this article, we’ll discuss what a business credit score is, what it means to you, and how to improve it.

What is a credit score?

A credit score is a rating that shows how reliable you are in paying off debts. A small business credit score is the same, but for your business. A higher number is good because it shows that you are paying back the debt on time. This shows that you are trustworthy and lenders are more likely to accept you as a customer. A low credit score can indicate that there are problems such as unpaid debts, missed payments, bankruptcy or a lawsuit against your company.

Why is a business credit score so important?

Your small business credit score shows how well your company is paying off its debts and making loan payments. When you’re looking for more financing, lenders will look at your credit score to decide whether or not to lend you money. This will affect you when you are looking for funding such as loans, overdrafts or business credit cards for everyday business purchases. Most lenders will have a minimum credit score that a small business must have to qualify for a new line of credit. With some lenders, your credit score will also determine the interest rate you’re offered.

If your small business has a bad credit rating, you can still look into getting a new line of credit. There are many bad credit lenders that can help if you have bad credit. However, you will usually have to pay higher interest rates if your business has a bad credit rating. You may also find that your credit limit—how much you can borrow—is lower. This is because small businesses with low credit scores are viewed by lenders as riskier investments.

“Building your credit score is the number one way to get flexible and valuable business financing. Getting a business credit card allows you and your employees to work on your company’s credit score in preparation for larger investments, while helping you make purchases easily and smoothly.”

– Damian Brychcy, COO and US MD Capital on Tap

What are credit agencies?

Credit agencies are organizations that monitor credit scores. They evaluate an individual’s or business’s credit history and score. Some of the major credit agencies include Experian and Equifax, but there are others that also offer credit rating services. Each credit agency has its own standards. Some companies rate the credit score from 0 to 100, while others rate it from 0 to 999. It is important to know the scale of a particular credit agency so that you can effectively assess how good your credit score is.

What is credit history?

A credit score is more than just your small business credit score. A credit score is based on your credit history. The history shows all the times your small business has applied for a line of credit, missed payments or late repayments, as well as more serious credit issues like foreclosures.

How can I improve my business credit score?

If you need to improve your small business credit score, one of the main ways is to use your line of credit responsibly. Some ways to do this include:

  • Not using your entire credit limit – This may make it appear that your business is having financial difficulties and may not be able to repay other loans
  • Don’t apply for too many new lines of credit – Again, this can give the impression that your business is in trouble
  • Making payments on time – Make sure you don’t miss any payments and avoid paying late.

Damian Brychcy continues to add. “Business credit cards can help boost your company’s credit score even for small purchases, while using cash won’t affect your credit history. This is one of the great advantages of giving credit cards to your employees, as long as you make sure you keep up with the required repayments.”


A business credit score is very similar to a personal credit score. Credit agencies track your credit and payments, and you can check your business credit score with any of the major credit agencies. If you make your repayments on time, your business credit score will improve. You should always try to avoid late payments or missed payments as this will lower your small business credit score. Having a business credit card like the Capital on Tap Business Credit Card (issued by WebBank) is an easy way to build your credit score.

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