How Is Business Credit Score Calculated?

By Mav OT •  Updated: 01/28/24 •  5 min read

When it comes to a company’s financial obligation and creditworthiness, the business credit score speaks more. The business credit score is a numerical representation of how financially disciplined a company may be. 

There has been a significant emphasis on the role’s significance in securing favourable financial deals and partnerships in recent years. 

As part of the evaluation process, various factors are taken into consideration, including payment history, credit utilization, and financial stability. 

How can one build a business credit score? What actually is the business credit about? Join us as we take you through the composition and how business credit score is calculated.

What is a business credit score?

A company’s ability to pay its bills on time is reflected in its creditworthiness, which is quantified by a corporate credit score. A score between 0-100 indicates that the credit score range could be lower or higher. This score is based on a number of factors, such as the borrower’s payment history, the amount of credit used, and public records. It is a common tool for both lenders to assess the reliability of a loan and the likelihood of on-time payments. 

To attract investors and build trust with potential partners, a company’s credit score must remain positive. A company’s creditworthiness can be enhanced and protected by effective financial management and regular monitoring.

How is business credit score calculated?

A business credit score tells lenders how likely it is that a company will pay back its loans on time and not miss payments. Lenders use business credit scores to decide who can get loans and how much interest to charge. Scores for businesses range from 1 to 100. The bigger the number, the better a business is seen regarding credit. 

Different credit reporting companies use slightly different methods to figure out a business’s credit score, but in general, they look at the following things. These things form the percentage value of your credit over a period of time. 

How to build a business credit score in South Africa?

Building a business credit score in South Africa is not a straightforward process. Some of these steps are supplementary and can be complementary. 

It is crucial to understand the rationale behind every action towards building your business credit. These steps, when done right, can provide you with immersive opportunities when it comes to building a good credit score. 

Here are some tips to help you build your credit score in South Africa. 

Monitor your credit score.

Many banks first offer firms money based on owners’ credit scores. Practice by paying bills on time and following payment terms to build credit. This prevents your credit score from implicating the company.

How long does it take to get a business credit score?

Getting a business credit score does not mean once you have a credit account, you are automatically in there. You need to get the information right from the initial stage to get your business credit score. 

Once the discipline acts are applied, it could take a year or two to build a credit score. 

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