What is a business credit score and how to improve yours

Published Monday 29 September 2025

Table of contents

• What does a business credit score say?
• How business credit differs from personal credit
• How are business credit scores calculated?
• How to check your business credit score
• What is a good business credit score
• How to get a good business credit score
• How to deal with businesses who have a poor credit score
• Strategies to manage your cash flow
• Manage your business credit score with confidence
• FAQs on business credit scores

Key takeaways

• Monitor your business credit score by checking reports from Dun & Bradstreet, Experian, and Equifax three to four times per year to catch errors early and understand what lenders see when evaluating your business.
• Prioritize on-time payments to all vendors and suppliers, especially utilities and major suppliers who report late payments most frequently, as payment history is the most significant factor in your business credit score calculation.
• Communicate proactively with vendors before missing payment deadlines by contacting them in advance, explaining your situation honestly, and providing a specific payment date to avoid negative credit reporting.
• Evaluate potential customers' business credit scores before extending payment terms, and adjust your invoice terms accordingly by setting shorter due dates, requesting deposits, or charging late fees for higher-risk businesses.

What does a business credit score say?

Good business credit scores unlock better business opportunities and cost savings. Here’s what they can do for your business:

• Get better payment terms: Access extended payment periods and lower deposits
• Secure easier financing: Get faster loan approvals and better interest rates
• Improve cash flow: Benefit from favorable terms that boost your working capital

You can also use credit scores to evaluate potential customers. Businesses with good scores are more likely to pay your invoices on time.

How business credit differs from personal credit

You have a personal credit profile, but your business has a separate credit profile. Both measure creditworthiness, but they use different information.

• Identification: Personal scores use your Social Security number (SSN); business scores use your Employer Identification Number (EIN)
• Scoring models: Personal scores range from 300 to 850; business scores usually range from 0 to 100, depending on the bureau
• Information used: Personal credit uses your borrowing and repayment history; business credit uses your company’s payment history, credit utilization, and public records

Keeping them separate helps protect your personal assets and lets your business build its own financial identity.

How are business credit scores calculated?

Business credit scores are calculated using proprietary algorithms from different credit bureaus, so your business may have multiple scores. While the exact formulas vary, most scoring systems evaluate these core factors:

• Payment history: Track late or missed payments to suppliers, lenders, and vendors
• Public records: Include business registrations, tax liens, bankruptcies, and court judgments
• Credit utilization: Measure how much of your available credit you use
• Length of credit history: Show how long your business has had credit accounts
• Vendor reports: Collect direct feedback from suppliers about your payment behavior

Your business credit score might be on a scale of 1–5 or 1–100, depending on the credit bureau. A higher score shows you pay your bills on time

How to check your business credit score

Checking your business credit score helps you manage your company’s financial health. You can get reports from the main business credit bureaus: Dun & Bradstreet, Experian, and Equifax.

Some services let you see a summary of your credit information for free. Others offer detailed reports and monitoring for a fee. Reviewing your report regularly helps you spot errors and see what lenders and suppliers see when they evaluate your business.

What is a good business credit score?

Most business credit scores range from 0 to 100. A score of 75 or higher is generally considered low risk, making it easier to get approved for loans and favorable payment terms.

Focus on keeping your score in the upper range. Each lender has its own criteria, but a higher score puts your business in a strong position.

How to get a good business credit score

Improving your business credit score means making consistent payments and managing your finances responsibly. These strategies help you build stronger credit:

Review your business credit score three to four times a year

If your score drops, contact the credit bureau. They must explain the reason and correct any errors under the Fair Credit Reporting Act. The reason could be:

• Reporting errors: Dispute and correct incorrect payment information
• Disputed invoices: Explain and resolve legitimate payment delays
• Identity confusion: Fix mix-ups with similarly named businesses

Pay bills on time

Most of your business credit score will come down to on-time payments.

• Automate bill tracking: Set up accounts payable systems to avoid missing due dates
• Schedule automatic payments: Use accounting software to prevent human error
• Monitor cash flow: Track incoming and outgoing funds to prevent payment delays
• Prioritize large vendors: Pay utilities and major suppliers first, as they report late payments most often

Be upfront if you're having cash flow issues

Cash flow problems happen to most businesses at some point. When payment delays are unavoidable, take these steps:

If you need to delay a payment, follow these steps:

• Contact vendors before payments are due
• Explain your situation honestly
• Provide a specific payment date

Most suppliers prefer you communicate with them rather than surprise them. Letting them know in advance can help you avoid negative credit reporting.

How to deal with businesses who have a poor credit score

You can use credit scores to protect your business from bad debts. Check the credit scores of new and existing clients, and take steps to control risk.

1. Know what a poor business credit score is

It can be difficult for businesses to achieve a high credit score. When reviewing other businesses’ scores, focus on trends rather than single numbers.

• A middle-of-the-road credit score is common. Pay closer attention if a business is in the bottom quarter of the scale
• If an existing client has a poor credit score, consider your experience with them. Focus on clients whose scores are consistently trending downward

2. Set cautious invoice payment terms for higher-risk businesses

You can work with businesses that have lower credit scores, but you may want to structure the agreement differently.

• Set shorter due dates to limit credit exposure
• Request an upfront deposit
• Charge interest or a late payment fee for overdue invoices

3. Lower your dependence on late payers

Businesses that consistently pay late can put pressure on your cash flow and affect your credit score. Avoid relying too much on late-paying clients. Gradually reduce your dependence on them.

Strategies to manage your cash flow

Strong cash flow management directly improves your business credit score by ensuring consistent, on-time payments.

You can use these strategies to manage your cash flow:

• Set shorter payment terms and follow up on overdue invoices
• Avoid large purchases when cash reserves are low
• Maintain cash buffers to cover unexpected expenses

Xero online accounting software helps you track both incoming payments and upcoming bills, giving you better visibility into your cash position.

Manage your business credit score with confidence

Credit scores can seem complex, but protecting your business credit is simple. Pay your bills on time, monitor your cash flow, and check your credit report regularly.

With a clear view of your finances, you can make confident decisions that support your business growth. Xero helps you stay on top of your financials, so you can run your business, not your books.

Try Xero for free to simplify your business finances.

FAQs on business credit scores

Here are some common questions and answers small business owners may have about business credit scores.

Does my LLC have its own credit score?

Yes. Once your LLC is registered and has an Employer Identification Number (EIN), it can start building its own credit history. Keep your business and personal accounts separate to maintain this distinction.

Does your EIN have a credit score?

Your EIN does not have a score, but it works like a Social Security number for your business. Credit bureaus use your EIN to track your company’s financial data and payment history, which they use to calculate your business credit score.

How long does it take to build business credit?

Building a strong business credit score takes time and consistency. It usually takes a few months to a couple of years. Establish trade lines with suppliers who report to credit bureaus and always pay your bills on time.