Quick Summary
Most business loans require a minimum personal credit score of around 600–680, depending on the lender and loan type. Lower scores may qualify for online or alternative financing, but rates and terms are typically less favorable.
Managing corporate credit is more complicated than it seems at first glance. Lenders and credit card providers look at businesses differently than individuals—that includes credit scores. People have personal credit scores, companies have business credit scores. You’ll need to understand both if you’re applying for a business loan or a business credit card.
This article breaks down how personal and business credit scores work, the minimum scores lenders typically require, and quick ways to strengthen your business credit.
What you need to know
- Understanding both personal and business credit scores is crucial, as they affect your loan eligibility, interest rates, and credit limits.
- Building strong credit habits, such as paying bills on time, maintaining low debt, and keeping consistent cash flow, helps improve and maintain a good credit profile.
- Leveraging tools like Bluevine Business Checking can enhance underwriting, increase approval chances, and provide more favorable loan terms.
How lenders use credit scores to determine business loan eligibility
When you apply for a business loan or credit card, lenders look at both your business credit and your personal credit to get a full picture of your financial reliability. They use two types of credit checks during the process:
- Soft inquiry: A quick look at your credit history, usually during pre-qualification, to spot any major red flags like defaults or judgments. Soft pulls don’t impact your credit score.
- Hard inquiry: A full review of your credit reports and FICO® score to understand how you handle debt and payments. Hard pulls do show up on your report, so it’s best to limit them.
Lenders use these checks to gauge risk, set your loan amount, and determine your terms. Strong credit helps you qualify for more money and better limits, while weaker credit can keep you from getting approved for the most favorable products.
Did you know?
You can apply for a Bluevine Line of Credit and term loans through our trusted partners with one simple application—all without impacting your credit score.
Since we use a soft inquiry, or “soft pull” of your credit history, you’re able to submit an application and review your offers with no impact to your personal credit score. Your credit will only undergo a hard inquiry, or “hard pull,” if you accept a financing offer.
Your credit profile also affects your spending flexibility. Higher limits give your business more room to manage cash flow, cover expenses, and handle seasonal swings.
And while interest and finance charges add cost, they’re generally tax-deductible—one of the built-in financial benefits of using business credit responsibly.
Minimum credit score requirements for business loans
The credit score you need to qualify for a business loan varies by lender and loan type. Generally, higher scores improve your approval chances and the terms you’ll receive.
| Business credit score | Financing options and outlook |
|---|---|
| 700+ (Excellent) | Excellent position to secure traditional bank loans, credit cards, or lines of creditFavorable rates, higher limits, and easy access to options like SBA and term loans |
| 650–699 (Good) | Traditional loan interest rates might be slightly higherSBA loan approval may depend on other factors (like business revenue and time in operation) |
| 600–649 (Fair) | Financing options become more limited. You might need to explore alternative lenders or provide proof of strong cash flow to increase your approval odds. |
| 550–599 (Poor) | Approval from traditional banks is improbable. Most business owners in this range turn to online lenders or short-term financing. |
| 549 or Below (Very Poor) | Obtaining a business loan is extremely challenging. Your focus should be on rebuilding your credit, or you will need to seek out specialized “bad credit” lenders. |
Understanding personal and business credit scores
A personal credit score is basically a quick snapshot of how reliably you manage debt. Lenders use it to gauge how risky it is to lend you money, which directly affects your approval odds, interest rates, and credit limits.
The most common model is FICO®, which pulls data from Experian, Equifax, and TransUnion and scores you from 300–850:
- Excellent: 800–850
- Very good: 740–799
- Good: 670–739
- Fair: 580–669
- Poor: 300–579
Your score is shaped by factors like payment history, credit utilization, length of credit history, new credit inquiries, and your overall credit mix.
Business credit works the same way in spirit. Lenders use it to understand your company’s financial reliability, but the scoring systems place more emphasis on how your business pays vendors and manages day-to-day obligations.
Key business credit scores:
- Experian Intelliscore (1–100): Measures the likelihood your business will become delinquent in the next 12 months. It heavily weighs payment history, outstanding balances, credit utilization, public records, and overall business stability.
- Equifax Payment Index Score (0–100): Focuses on how promptly your business pays its bills. A higher score means you consistently pay vendors on time or early. Equifax also tracks credit utilization and any derogatory marks.
- Dun & Bradstreet PAYDEX (0–100): Purely based on payment behavior. To be scored, you need a DUNS number. A PAYDEX of 80+ means you typically pay vendors on time; 90+ means you pay early.
- FICO® SBSS (0–300): A blended score that pulls from both business and personal credit, plus your company’s financials. Many banks, fintechs, and the Small Business Administration (SBA) use it for loan decisions. Strong performance across all three areas is key.
What is a good business credit score?
A strong business credit score shows lenders that your company is financially responsible and low-risk, which can help you secure loans or credit even if your personal credit isn’t perfect. Building and maintaining a good score should be a core part of your business financial management strategy.
The table below shows how FICO® credit scores correspond to risk levels, helping lenders determine your likelihood of loan approval and favorable terms:
| FICO score range | Risk level |
|---|---|
| 800–850 | Low-risk / Exceptional |
| 740–799 | Low risk / Very good |
| 670–739 | Medium risk / good |
| 580–669 | Medium risk / Fair |
| 300–579 | High risk / Poor |
How business credit scores are calculated
Your business credit score is built from a mix of financial signals that show how reliably and responsibly your company operates. The exact formula varies by scoring model, but lenders usually zero in on a few core factors:
- Your company’s payment history (the most important factor)
- Business age and size
- Debt usage and outstanding balances
- Available credit
- Public records, like liens or bankruptcies
- Industry risk, based on how volatile your sector is
- Financial data (for models like SBSS)
Factors that affect business credit scores
Business credit scores measure how reliably your company handles debt, payments, and overall financial obligations. Lenders use these scores to determine loan eligibility, credit limits, and terms, so understanding the specifics can help you improve your score.
- Payment history: Paying vendors, suppliers, and lenders on time—or early—has the biggest impact. Even a single late payment reported to a bureau like Dun & Bradstreet can lower your score by 20–30 points.
- Outstanding debt: High balances on credit lines or loans relative to your limits signal overextension. Keeping utilization under 30% of available credit helps maintain a strong score.
- Company age and size: Businesses operating longer than 3–5 years with consistent revenue are viewed as more stable. Small or newly established companies often start with lower scores due to limited credit history.
- Credit inquiries: Hard credit pulls from banks or vendors, especially multiple inquiries within 6–12 months, suggest financial strain and can reduce scores temporarily.
- Public records: Liens, judgments, or bankruptcies reported to bureaus like Equifax or D&B have a major negative impact, sometimes lowering scores by 50 points or more.
- Industry risk: Certain industries—like restaurants or construction—are historically higher risk. Scores may be adjusted downward even if your payments are timely.
Factors that affect personal credit scores
Personal credit scores are calculated using five main factors:
- Payment history (35%): Your record of on-time payments is the most important factor. Late or missed payments signal risk to lenders and can significantly lower your score.
- Amounts owed (30%): This accounts for how much of your available credit you’re using. High balances relative to limits indicate higher risk, while low utilization helps boost your score.
- Length of credit history (15%): Lenders prefer borrowers with a longer track record. Older accounts with positive histories show stability and responsible credit management.
- New credit (10%): Opening multiple accounts or applying for several loans in a short period can lower your score. Frequent inquiries suggest that you’re a higher risk to lenders.
- Credit mix (10%): Having a variety of credit types—credit cards, loans, mortgages—shows you can manage different types of debt responsibly, which can positively impact your score.
How to improve your credit score to enhance loan eligibility
Improving your credit score—personal and business—comes down to showing lenders you’re reliable, low-risk, and financially organized. Here are the most concrete actions that move the needle:
- Pay every invoice, bill, and vendor early or on time. Even one 30-day late payment can drop your business score by dozens of points. Set up auto-pay for recurring bills and calendar reminders for vendor invoices.
- Keep your credit utilization under 30%. If you have a $20,000 credit limit, try to keep your balances under $6,000. This applies to both personal credit cards and business credit lines.
- Reduce outstanding balances before applying for financing. Paying down revolving debt in the months leading up to a loan application can give you an immediate bump in score.
- Maintain steady, predictable cash flow. Lenders look at whether you consistently have enough cash to cover obligations. This means invoicing on time, following up on late payments, and keeping a buffer in your operating account.
- Monitor your credit reports monthly. Disputing errors—like misreported late payments or incorrect balances—can raise your score quickly.
- Don’t open too many new credit accounts at once. This can lead to multiple hard inquiries in a short window, ultimately lowering your personal and business credit profile.
Preparing for a business loan application
When applying for a loan, lenders will want to see documentation of your company’s financials. Gather bank statements, financial reports, and debt statements before you begin the process. You’ll also need personal identification, so bring a driver’s license or passport with your business articles of incorporation or DBA certificate. Prepare digital copies of these if you’re applying online.
You should also check your personal and business credit reports before applying for a loan. If there are any errors, contact the credit reporting bureaus. You’ll need to have those corrected before you approach the lender. That usually takes time, so we recommend starting regular credit score monitoring and credit report reviews, if you haven’t already done so.
By paying your bills on time, keeping your debt balances low, and monitoring your credit reports for any erroneous activity that could affect your credit scores, you can set yourself up for success when applying for a business loan.
Power your next stage of growth with a business loan
A strong credit score for business loan approval can help you secure funding for growth, cash flow, or new opportunities. Understanding and improving both personal and business credit puts you in a better position for favorable loan terms. Learn more in our guide to improving business credit.
Bluevine Business Checking customers benefit from account activity that helps us underwrite loans and lines of credit. Engaged accounts may receive faster approvals, proactive offers in the dashboard, and better interest rates. Get started with Bluevine lines of credit and partner business loans and see how your credit and account activity can work together to grow your business.
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