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Definition and Examples of Business Credit Like personal credit, business credit is a measure of how risky a business is or how likely it is to be able to pay back a loan or other financial obligation. A business credit score is exactly what it sounds like it would be: a credit score for a business instead of an individual. Generally, a business's credit score is based on the information in its credit report. This report can include information about the business, such as its number of employees, payment history, account information, amounts owed, and more. A business credit report comprises a credit score and general information about the business. The credit score is based on how well the business has paid its bills, how much credit it has used, and how much credit it has left. Business credit is different from the credit profile of the business owner and is used when your business needs to borrow money from a lender. For example, you might apply for a cash flow loan if your business needs more working capital. As part of the application process, lenders will look at your business credit to see how your business is financially doing. This is like what a person does when they want to get a personal loan. But the loan would be given to the business based on its credit. Experian, Equifax, and TransUnion are the three main credit bureaus that give out personal credit reports. Most of the time, they are between 300 and 850. On the other hand, a business credit score has a different scale. It usually goes from 1 to 100. It's reported to Experian Commercial, Dun & Bradstreet, and Equifax Small Business. You have to sign up with Dun & Bradstreet before you can get a business credit report from them. When you sign up, you'll get a unique D-U-N-S Number that lenders can use. You will learn more about them later in this course. How credit for a business works It's essential to understand how business credit works, whether you're looking for a loan or trying to get your business off the ground. Learning how to build credit for your business early can give you more options for getting money. It can also make it easier to keep your business's credit and financial obligations separate from your own credit. Businesses set up as separate legal entities, like a limited liability company (LLC) or a corporation, can get business credit. The business is a separate legal entity with its employer identification number (EIN), like a Social Security number used to get loans and file taxes. As with your credit score, your payment history is essential to your business credit score. This means you must pay your debts on time and in full. Business credit scores also consider how long your business has been around. The longer you've been in business, the better your score may be. When figuring out a business credit score, debt and how it is used are also taken into account, as well as the size and type of business. Remember that some business credit scores only look at one factor, while personal credit scores can look at more than one. For example, with the Dun & Bradstreet PAYDEX business credit score, only look at how you've paid in the past.