Business credit is a measure of a company’s ability to borrow money and manage debt, reflecting its financial responsibility and risk level. It functions similarly to personal credit but pertains solely to a business entity. Established through credit accounts with vendors, lenders, or financial institutions, business credit is tracked and reported by specialized credit bureaus. Strong business credit allows businesses to access financing, secure favorable terms on loans, and negotiate better supplier contracts.

Building and maintaining business credit is critical for the growth and stability of a company. It separates personal and business finances, protecting the owner’s personal assets and credit. Additionally, good business credit can lead to higher borrowing limits, lower interest rates, and more opportunities for scaling operations. It also demonstrates credibility to stakeholders, such as suppliers and potential partners, reinforcing trust in the company’s financial management.

The five major business credit bureaus are Dun & Bradstreet, Experian Business, Equifax Business, CreditSafe, and Ansonia Credit Data. These bureaus gather and analyze data such as payment history, outstanding debts, and financial performance to generate business credit scores. Reports vary, with Dun & Bradstreet using the PAYDEX score, while Experian Business provides an Intelliscore. Each bureau focuses on different aspects of financial health, so monitoring reports across all bureaus ensures a comprehensive understanding of a business’s credit profile.