Test Your Business Credit Score IQ 

Are you ready to grow your business with low-cost funds? If so, it’s imperative that you understand how banks look at your business during the loan application process. 

That’s why SmartBiz Loans created SmartBiz Advisor*, an Intelligent CFO™ for small business loans. When you sign up for this free tool, you’ll discover your Loan Ready Score™, showing you where you stand for each of the key areas banks use to evaluate your business.  Just like a CFO in a large business, SmartBiz Advisor can help you build a healthy business lending profile by educating you about factors banks consider.  

One key area banks look at is your business credit score. This post will help you understand why a good business credit score can help you qualify for an SBA loan, the “gold standard” because of low rates and long terms.  Read on to test your knowledge about business credit scores!  



Question 1

If I have a small business, I automatically have a small-business credit score.  

Answer: False   

Credit reporting companies require certain information to generate a business credit report. Here’s a quick outline of steps you can take to establish business credit.  

  • Incorporate your business 
  • Obtain a federal tax identification number (EIN) 
  • Open a business checking account in the legal business name.  
  • Establish a business phone number. 
  • Open a business credit file with all three business reporting agencies: Experian, Equifax and TransUnion. 
  • Obtain business credit cards.  
  • Establish a line of credit with vendors or suppliers.  
  • Pay your bills on time. 


Question 2

When attempting to qualify for outside funding, it’s OK to use your personal credit score instead of your business credit score. 

Answer: False 

As a business owner, you should always keep personal and business credit scores separate. Here are key reasons: 

  • With a business lender, you’re contractually required to pay the loan back. The clear rules and deadlines force you to use the money wisely. 
  • If you don’t separate the two and your business goes under, you might lose your personal savings. 
  • If your business is sued, personal assets could be at risk. 
  • Separate business credit makes it easier to identify business expense deductions for tax purposes. 
  • Separate business credit protects your personal credit scores. 


Question 3

Anyone can request and view my business credit score.  

Answer: True  

Personal credit reports are regulated and can be viewed only with the permission of the report holder. On the other hand, commercial credit reports are available to the public. This means that anyone — including potential lenders and suppliers — can openly view your business’s credit report.  


Question 4  

There are things I can do to improve my business credit score. 

Answer: Absolutely True!  

There are many strategies you can put into place to improve your business credit score including:  

  • Pay Bills on Time.  
  • Limit Credit Usage and Keep Debt Levels on the Low.  
  • Check Your Business Credit Report on a Regular Basis.  
  • Strive to Use Credit Responsibly  
  • Avoid Closing Accounts.  
  • Correct Any Mistake. 

Pro Tip: SmartBiz Advisor offers actionable advise to business owners about improving business credit scores to get loan ready. Sign up today for free here 


Question 5

I only need to check my business credit score once a year.  

Answer: False 

This is a very important step every small business owner should perform regularly. Experian outlines the reasons why 

  • Check for completeness and accuracy 
  • Learn how your company compares with others in your industry 
  • Examine the strengths and weaknesses of your file 
  • Develop a strategy to improve your company’s credit standing 
  • Better control risk 
  • Increase cash flow 
  • Build stronger customer relationships 
  • Avoid business credit fraud 
  • Receive alerts on new derogatory information 

Each credit bureau, Equifax, Experian and TransUnion, is required by federal law to provide a free copy of your credit report once a year upon request 


Additional Resources 

The SmartBiz Loans Small Business Blog offers more information about business credit scores. Check out these posts to learn more:  

Personal Credit Score vs. Business Credit Score 

What are Business Credit Scores, and Why are They Important? 

5 Smart Credit Strategies for Small Business Owners 

Do You Know Your SBSS FICO Business Credit Score? 

What is the SmartBiz Advisor Loan Ready Score™? 


In Conclusion  

Your business credit score is one of seven key criteria used to determine your personal Loan Ready Score, a transparent way to see how lenders look at you and your business. The Loan Ready Score wraps seven key areas banks use to evaluate a business into one simple score and your business credit score is one of those seven key criteria. 

To learn more about the seven criteria and increase your likelihood of approval when applying for low-cost funding, sign up for our new no-cost online educational tool, SmartBiz Advisor. This tool helps you learn how banks typically evaluate your business and recommends ways to increase your likelihood of approval when applying for the low-cost SBA and bank funding you deserve. Just like a CFO in a large business, SmartBiz Advisor can help you learn how to build your lending profile by educating you about the factors banks consider.  

*The information provided through SmartBiz Advisor, including the Loan Ready Score, is for educational purposes only. SmartBiz Advisor is not a financial or legal advisor as defined under federal or state law. Use of this information is not a replacement for personal, professional advice or assistance regarding your finances or credit history.