Commercial credit is also known as business credit or corporate credit. Business credit pertains to the creditworthiness and financial track record of a business entity. It is utilized for business-related purposes, such as obtaining loans, leasing equipment, or purchasing inventory. Businesses also have business credit scores and reports.

Reporting Agencies

Business credit is reported by specialized business credit bureaus, such as Dun & Bradstreet, Experian Business, and Equifax Business. These bureaus collect data from vendors, suppliers, financial institutions, and public records to generate a business credit report and score.

Evaluation Criteria

Business creditworthiness is assessed by considering the company's payment history, trade credit, public records, industry risk, size of the business, and other relevant factors. Business credit scores, like the PAYDEX score for Dun & Bradstreet, range from 0 to 100.

Once a creditor or agency reports an account to a business credit bureau, it should appear on your associated business credit report. If your company always pays the account on time or early, your business credit score may improve.

Liability and Separation

Business credit establishes a separate credit profile for the business entity, providing a level of separation between personal and business finances. In case of default or bankruptcy, business assets are generally at risk, but personal assets may be protected if the business is set up as a separate legal entity (e.g., limited liability company).

Business and personal credit reports are separate, small business owners need to proceed with caution where business credit obligations are concerned. It’s not unusual for commercial lenders and business credit card companies to require personal guarantees from business owners. In such scenarios, paying a business credit obligation late might damage both your personal and business credit scores.

An excellent business credit score may make it challenging to qualify for affordable financing such business loans , business credit cards or business line of credit bank.

Credit Building

Building business credit involves establishing trade lines with suppliers and vendors who report to business credit bureaus, paying bills on time, maintaining a positive financial track record, and utilizing business credit responsibly.