Do you know the difference between your personal and business credit scores? A survey conducted in 2015 indicates that nearly half of small business owners are unaware that their business carries a credit score of its own. The majority of those who do know are unsure of what their score is really saying about their business.

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About Business Credit

If you keep an eye on your personal credit score, you know where your score lies on a scale from 300 to 850. With business credit (also called commercial credit), your score might range anywhere from 0 to 100. The differences between the two don’t end there. Unlike personal credit scores, there’s a good chance you’ll have to pay to see your business score.

How the business score is calculated may also differ from your personal score. That is to say, your business score may fluctuate markedly from bureau to bureau. This is because not every bureau will stick to FICO’s algorithm, which is used to determine personal credit.

For this reason, it may be advisable to collect your business credit score from each bureau for comparison. You can contact the reporting bureau to have any errors corrected.

It’s also important to know what factors influence your business credit score. First, a bureau will typically take into account public filings. This will expose any judgments, bankruptcies, or liens associated with your business.

Next, it’ll measure the size and number of years in operation, as well as the SIC code used to classify your business. Finally, your score should factor in details about your financial habits – what you owe, what you pay, when you pay it, and what you have on hand.

Building Better Business Credit

A good business credit score can stabilize a business during difficult times, and help you grow when you need to. If you’d like to improve your score, there are things you can start doing today which can see you making great gains in the next 18 months.

If a lack of credit is dragging you down, compare various small business credit cards. On top of helping you build business credit, these can come with benefits like reward points, airline miles, and more.

If, like many other businesses, you’re going to add business credit to the mix, it’s absolutely vital that you make payments on time. The same goes for any vendors you work with. Nothing boosts your score like proving you are capable of paying off what you owe on schedule.

Additionally, become a student of your business credit report. Once any errors have been addressed, continue obtaining our report every quarter. Note any changes and identify how last quarter’s events impacted the report.

Do you ever find the line between business and personal is getting a little blurry? Many small business owners do. Ultimately, getting up to speed on your business credit can inspire you to do more to separate the two. Drawing that line can make tax time less of a hassle, and protect assets. So do your due diligence today, and strengthen your financial standing at work, as well as at home.

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