Business Credit Scores Impact on Business Lending
For many years consumers have been able to track their ability to borrow money and receive credit from banks and other lending institutions through a system that ranked their creditworthiness on a scale known as a personal credit score. Today businesses have that same option. Several major credit information companies, like Experian, Equifax, Business Credit USA and Dun and Bradstreet now have databases on small businesses all over the country and have developed a business credit scoring system which can allow consumers, suppliers, and other companies to rate the credit of small businesses.The business credit score will help banks and other lending institutions approve or deny credit as well as determining the level of interest to be paid on all new business loans. The higher the business credit score, the lower the interest rate. The lower the business credit score, the harder it will be for that business to get credit, especially at favorable market rates.Business will have to self-monitor their business credit score just like consumers have to keep a close watch on their personal financial credit score. If there are bad debts or former bankruptcies on their business credit files they will have to take action or run the risk of being turned for future credit requests. Having a good business credit score will be an important factor that will need their personal attention.Some businesses, banks and other lending institutions have long had their own