Impact of Business Credit Scores on Your Holdings Account

Business credit scores are more than just numbers-they’re like a financial report card for your business. Whether you’re applying for a business loan, negotiating with suppliers, or shopping for insurance, your business credit score can open doors or slam them shut. Let’s break down everything you need to know about business credit scores, how they’re calculated, why they matter, and how they can affect your Holdings account and your business’s financial future.

What Is a Business Credit Score?

A business credit score is a numerical rating that reflects your company’s creditworthiness-essentially, how reliable your business is when it comes to repaying debts and meeting financial obligations. Unlike personal credit scores, which typically range from 300 to 850, business credit scores usually fall between 1 and 100, with higher numbers indicating stronger creditworthiness.

This score isn’t just for banks. Lenders, suppliers, insurers, and even potential partners use your business credit score to decide whether to work with you, how much to lend, and what terms to offer. In short, your business credit score is a key that can unlock better financing, improved vendor relationships, and lower costs across the board.

How Business Credit Scores Work

Business credit scores are calculated by specialized agencies using a mix of financial data, public records, and industry information. Here’s a closer look at the main factors that influence your score:

• Payment History: Consistently paying bills on time is the single most important factor. Late payments, defaults, or collections can drag your score down quickly.

• Credit Utilization: This measures how much of your available credit you’re using. Keeping your usage below 30% of your limit is ideal; high utilization signals risk to lenders.

• Public Records: Bankruptcies, liens, and judgments are red flags that can significantly lower your score.

• Company Size and Industry Risk: Larger businesses or those in stable industries may be viewed as less risky, while startups or companies in volatile sectors might face more scrutiny.

• Credit Mix and Age: The types of credit you use (like credit cards, loans, and trade credit) and the length of your credit history also play a role.

Each business credit bureau has its own formula, but these core factors are common across the board.

Major Business Credit Scoring Agencies

There are several agencies that track and report on business credit, but three stand out as the most influential:

Dun & Bradstreet (D&B):
D&B’s PAYDEX score is a widely recognized measure of how reliably your business pays its bills. A score of 80 or above signals that you pay on time or early, while a lower score indicates late payments or other issues. D&B also offers other ratings, like the Financial Stress Score and Delinquency Predictor Score, which assess the risk of bankruptcy or late payments.

Equifax:
Equifax provides a Payment Index (0-100), a Credit Risk Score (101-992), and a Business Failure Score (1,000-1,880). These scores look at payment history, risk of delinquency, and the likelihood of business failure, respectively.

Experian:
Experian’s business credit score (1-100) and Financial Stability Risk Rating (1-5) help lenders and partners assess your risk of late payments or bankruptcy. Higher scores mean lower risk.

Other agencies like CreditSafe and Ansonia also provide business credit reports, but D&B, Equifax, and Experian are the most widely used in the U.S..

Why Business Credit Scores Matter

Your business credit score isn’t just a number-it’s a powerful tool that can impact nearly every aspect of your business’s financial life:

• Loan Eligibility and Terms: Lenders use your business credit score to decide whether to approve your application and what interest rate to offer. A high score can mean lower rates, higher credit limits, and easier approval for business loans and lines of credit.

• Insurance Premiums: Insurers often check your business credit score when setting premiums. A strong score can help you secure lower rates, saving your business money over time.

• Supplier and Vendor Relationships: Suppliers may offer better payment terms (like net-30 or net-60) to businesses with strong credit, improving your cash flow and flexibility.

• Business Opportunities: A good score can make your business more attractive to potential partners, investors, and even customers, as it signals financial stability and reliability.

• Separation of Personal and Business Finances: Maintaining strong business credit allows you to keep your personal and business finances separate, which is essential for tax purposes and personal liability protection.

On the flip side, a poor business credit score can mean higher interest rates, stricter terms, or even outright denial of credit. It can also make it harder to negotiate with suppliers and may result in higher insurance premiums and utility costs.

How Business Credit Scores Are Calculated

Each business credit bureau uses its own proprietary formula, but most rely on similar data sources and factors. Here’s a breakdown of what goes into your score:

• Trade Credit Transactions: Payment history with suppliers and vendors is a major factor. On-time payments boost your score, while late payments hurt it.

• Public Records and Legal Filings: Bankruptcies, liens, and judgments are included in your credit file and can significantly lower your score.

• Company Size and Industry Risk: Larger, more established businesses and those in low-risk industries are generally viewed more favorably.

• Credit Utilization and Financial Health: How much of your available credit you’re using (credit utilization ratio), your revenues, and the value of your assets all play a role.

• Credit Mix and Age: The types of credit you use and the length of your credit history are also considered.

It’s important to note that business credit reports can include information that stays on your record indefinitely, unlike personal credit reports where negative items typically fall off after seven to ten years.

What Is a Good Business Credit Score?

There’s no universal definition of a “good” business credit score, as each bureau uses its own scale. However, here are some general guidelines:

• Dun & Bradstreet PAYDEX:

  • 80-100: Low risk (on-time or early payments)

  • 50-79: Moderate risk

  • 0-49: High risk

• Equifax Payment Index:

  • 90-100: Payments are on time

  • 80-89: Payments 1-30 days overdue

  • 60-79: Payments 31-60 days overdue

  • Below 60: Payments more than 60 days overdue

• Experian Intelliscore:

  • 76-100: Low risk

  • 51-75: Low-to-medium risk

  • 25-50: Medium risk

  • 11-25: Medium-to-high risk

  • 1-10: High risk

Generally, a score of 75 or higher is considered good and will help you qualify for better rates and term.

How to Check Your Business Credit Score

Many business owners don’t realize they have a business credit score, let alone know how to check it. According to a recent survey, over 70% of small business owners didn’t know where to find their business credit score.

Here’s how you can check yours:

• Dun & Bradstreet: Request a D-U-N-S number for your business and set up an account to access your PAYDEX score and other ratings.

• Equifax: You can order your business credit report directly from Equifax’s website.

• Experian: Experian offers business credit reports and monitoring services online.

Some financial service providers and platforms also offer free or discounted access to your business credit score as a perk for their customers.

How to Improve Your Business Credit Score

Building and maintaining a strong business credit score takes time and discipline, but the payoff is worth it. Here’s how to boost your score:

• Pay Bills On Time (or Early): Consistent, on-time payments are the single most important factor in your business credit score. Set up reminders or automatic payments to avoid missing due dates.

• Keep Credit Utilization Low: Try to use less than 30% of your available credit. High utilization can signal financial stress and lower your score.

• Monitor Your Credit Reports: Regularly check your business credit reports for errors or negative marks. Dispute any inaccuracies promptly.

• Establish Trade Lines: Work with suppliers who report your payment history to the credit bureaus. Having multiple positive trade lines can boost your score.

• Open a Business Credit Card: Using a business credit card responsibly (paying in full and on time) helps build your credit history and improves your score.

• Separate Personal and Business Finances: Use your Employer Identification Number (EIN) instead of your Social Security Number when applying for credit, and keep business and personal accounts separate.

• Maintain Healthy Cash Flow: Lenders look for businesses that can manage their cash flow and meet obligations without relying on credit for day-to-day expenses.

Common Business Credit Score Pitfalls

Even well-run businesses can fall into traps that hurt their credit scores. Here are some common mistakes to avoid:

• Missing or Late Payments: Even a single late payment can lower your score and make future borrowing more expensive or difficult.

• High Credit Utilization: Maxing out your credit cards or lines of credit signals risk to lenders.

• Ignoring Your Credit Reports: Mistakes or fraudulent activity can go unnoticed if you don’t monitor your reports regularly.

• Not Establishing Trade Credit: If your suppliers don’t report your payment history, you’re missing an opportunity to build your score.

• Mixing Personal and Business Finances: This can muddy your credit profile and make it harder to qualify for business financing.

Business Credit Scores and Holdings Accounts

So, how does all this relate to your Holdings account? Here’s the good news: Holdings is designed to be your financial sidekick, not another gatekeeper. While many traditional banks and lenders rely heavily on business credit scores to make decisions about loans, lines of credit, and even basic account features, Holdings takes a more holistic approach.

• No Penalties for Building Credit: With Holdings, you won’t be penalized for being a new business or for not having an established credit score. We focus on rewarding good financial behavior-like responsible cash management and timely payments-rather than punishing you for the past.

• Zero Fees and High-Yield APY: Unlike traditional banks that may charge hidden fees or offer rock-bottom interest rates, Holdings gives you zero-fee banking and up to 3.0% APY on your deposits. That means your money works harder for you, regardless of your credit score.

• Integrated Financial Tools: Our platform combines banking, accounting, and bookkeeping in one place, making it easier to manage your finances and build a strong credit profile over time.

• Peace of Mind: With up to $3 million in FDIC insurance and dedicated support, you can focus on growing your business-not worrying about whether your bank will give you a fair shake.

While Holdings may not use your business credit score as a primary factor in decision-making, maintaining a good score is still important for your overall financial health and future opportunities. If you ever decide to apply for a business loan, lease equipment, or expand your operations, a strong business credit score will give you more options and better terms.

Frequently Asked Questions About Business Credit Scores

How long does it take to build business credit?
Building business credit is a marathon, not a sprint. It can take several months to a year or more to establish a strong credit profile, especially if you’re starting from scratch. The key is consistency-pay bills on time, keep utilization low, and monitor your reports regularly.

Can my personal credit affect my business credit?
Yes, especially if your business is new or you’re a sole proprietor. Lenders may check your personal credit history when you apply for business credit. Over time, as your business credit profile grows, your personal and business credit will become more separate.

What happens if my business credit score is low?
A low business credit score can make it harder to qualify for loans, result in higher interest rates, and limit your ability to negotiate with suppliers. It can also mean higher insurance premiums and utility costs.

How do I dispute an error on my business credit report?
Contact the credit bureau directly-Dun & Bradstreet, Equifax, or Experian-and provide documentation to support your claim. It’s important to resolve errors quickly, as they can negatively impact your score and your business’s reputation.

Do all vendors report to business credit bureaus?
No, not all vendors report payment history to the credit bureaus. Ask your suppliers if they report to D&B, Equifax, or Experian, and prioritize working with those who do. You can also list non-reporting vendors as trade references with D&B.

Real-World Example: How Holdings Helps SMBs Win

Let’s say you’re running a growing marketing agency. You’ve just landed a big contract and need to purchase new equipment and hire a few freelancers. Here’s how Holdings and a strong business credit score can work together to make your life easier:

• Zero-Fee Banking: You open a Holdings account and immediately start earning up to 3.0% APY on your deposits. No monthly fees eating into your profits.

• Integrated Accounting: You use Holdings’ built-in accounting tools to track expenses and manage invoices, making it easy to stay on top of cash flow and pay bills on time.

• Building Credit: You pay your suppliers early, and because they report to D&B, your PAYDEX score climbs. Now, when you apply for a business credit card or a line of credit, you qualify for better rates and higher limits.

• Growth Opportunities: With your strong credit profile and Holdings’ financial tools, you’re ready to seize new opportunities-like expanding into a new market or launching a new service-without worrying about hidden fees or getting turned down for financing.

Takeaways: Making Your Money Work Harder

• Business credit scores matter-but they’re just one part of your financial toolkit.

• Holdings is built for SMBs who want to maximize their money with zero fees, high-yield APY, and integrated financial tools.

• A good business credit score can unlock better rates, terms, and opportunities-so it’s worth investing the time to build and maintain it.

• Stay proactive: Pay bills on time, keep credit utilization low, monitor your reports, and work with vendors who report to the bureaus.

With Holdings by your side, you can focus on what matters most-growing your business and making your money work as hard as you do.

Ready to take control of your business finances?
Open a Holdings account today and experience banking that pays you back-no fees, no minimums, just perks for being a good customer.

Your business hustle deserves banking that works just as hard. That’s why we offer up to 3.0% APY while traditional banks offer... well, basically nothing.