What Is Considered a Good Credit Score for a Small Business?
Check Your Business Credit to Find Out Where It Stands
There’s a lot that goes into building a successful business. From marketing to the right customers to building strong partnerships to selling high quality products or services, every aspect of the business needs to be top notch if the business can be expected to succeed. Nowhere is this more evident than in the business’s credit score.
A business’s credit score can have a huge impact on a wide range of factors. Good business credit helps forge stronger business partnerships, it attracts more credible investors, it improves the company’s borrowing power, and it helps maximize its reputation. But, what exactly constitutes a good credit score for a small business. What number should you be aiming for?
Understanding How Business Credit Ratings are Scored
Similar to personal credit scores, a corporate credit score is based on a numerical scale. But, unlike consumer FICO scores which range from 300 to 850, credit ratings used for businesses fall between 0 and 100. The closer to 100 your credit score is, the stronger it is.
A business credit score between 80 and 100 is what a business should be striving for. This range indicates that the company is paying all of its debt obligations on time, as expected. Any numerical score between 79 and 70
is a sign that the company may be taking longer than 15 days to pay its debts.
A score closer to 50 is a sign that the company may be paying some or all of its bills 30 days late. Meanwhile, a score of around 20 is a good sign that the company has debts that are 120 days past due. Of course, the lower the number, the worse the company’s credit is, and the less likely other businesses or lenders are going to want to work with it.
Why Good Credit Is So Essential to Business Success
For many companies, credit is the lifeblood of their business transactions. From purchasing inventory to paying for services, a company that has access to credit has certain advantages over companies that don’t.
When a company does not have access to credit, all of its expenses must be made out of cash on-hand, and this can seriously undermine the company’s operational capabilities, not to mention its cash flow and reserves.
Businesses with good credit are considered less of a risk to lenders and other businesses because they have a long-standing history of being financially responsible. Do you know how your business credit stacks up against others in your industry? Check your business credit now to find out.
Published bySource: www.dandb.com