How Credit Scores Are Established for Businesses

As chairman of the board for a Puerto Rico-based bank, Julio M. Herrera Velutini assists small- and medium-sized businesses with financing in a timely fashion. Where some banks might take up to three months to approve credit requests, Julio Herrera Velutini’s bank does so in under 15 days.

Credit requests are denied or approved at different rates based on the result of an assessment of one’s credit score. Whereas a credit agency might measure an individual’s credit history in determining his or her credit score, businesses are assessed based on their creditworthiness – their risk of late payments. While individual credit scores range generally from 300 to 850, business credit is scored from 0 to 100, with higher scores representing a lesser likelihood of late payments.

Unlike standardized consumer credit scores, business credit score algorithms vary and track only the accounts under the name of the company, not the owner. For instance, the Dun & Bradstreet bureau collects payment information from vendors, banks, and credit card issuers, among other sources, to calculate a company’s risk, which it combines with its credit score and financial stress score to recommend a credit limit to a specific lender.