Does an LLC have a credit score?
Quick insights
- An LLC, which is one type of business entity, has its own business credit score and credit report.
- To establish a credit score for an LLC, you will need to generate credit activity, such as using a business credit card.
- You can access an LLC credit score from several different credit bureaus.
A Limited Liability Company (LLC) is one way businesses can structure themselves. It is different from other businesses because of its limited-liability status, meaning that the owners, shareholders and partners are not liable for the business’s losses. But because an LLC is structured differently from other types of businesses, does it have a credit score? Let’s review in the article below.
Understanding LLC credit scores
You may have heard of a personal credit score, which is a three-digit number that represents an individual’s creditworthiness. The credit score generated for your LLC is known as a business credit score, and a business credit score is a number that indicates your business’ level of risk to lenders when borrowing money. It is separate from your personal credit score.
Business credit scores vary depending on which credit bureau is providing them, but they essentially are all calculated based on a few common factors, including payment history, credit utilization and credit history. This score can be influential when it comes to lenders making decisions about loan approvals, interest rates, terms with suppliers and more.
What credit score does an LLC start with?
A newly established LLC likely starts off with no credit score. This may be because no credit activities have happened yet. Once an LLC has been established and begun pursuing business lines of credit (that reports to a business credit bureau), an LLC can eventually receive a business credit score. Depending on the credit bureau and scoring model used, it may take some time to generate this business score. The credit behaviors that occur during this time can impact that credit score.
Establishing an LLC credit score
To establish an LLC credit score, you first need to get your LLC registered through the government and the credit bureaus and receive an Employer Identification Number (EIN), which is often done as part of your business application process. Then, if you haven’t done so already, register with the credit bureau from which you want to receive your credit score. It may be helpful to research these credit bureaus to determine which kind of information you want to receive in your credit report and credit score.
These bureaus include:
- Dun & Bradstreet®
- Experian™ Business
- Equifax® Business
It can take some time to generate an LLC credit score. Credit activities, such as opening tradelines with vendors or applying for loans, can reflect in this score and impact it.
It’s helpful to note that building healthy financial habits, such as making consistent, on-time payments towards your loans and business credit cards, can positively impact your score. You can also build your credit score and credit history by diversifying your credit accounts. You can do this, for example, by applying for a business loan and a business credit card. Managing these lines of credit responsibly can help establish a healthy business credit score.
Note that an LLC credit score is not the same as other credit scores, like those predicting late payments.
How to check your LLC credit score
To check your LLC credit score, consider taking the following steps:
- Identify which credit bureau(s) you want to receive your score from: Unlike personal credit scores, business credit scores can be reported by additional credit bureaus, including Dun & Bradstreet®. Each bureau may have different information and scores for your LLC, so you may want to research these bureaus to see what kind of information they offer.
- Register with the bureaus: Next, you will need to register your business with a credit bureau, noting the following:
- Dun & Bradstreet: You'll need to obtain a Dun & Bradstreet number, or a D-U-N-S Number, to receive a business credit score. This is a nine-digit, unique identifier for your business. Registration is free and necessary for building your business credit file with this bureau.
- Experian Business and Equifax Business: Generally, these bureaus will automatically create a credit file when your business has financial or credit activity, such as when you apply for a loan.
- Request your credit reports: You can request a credit report directly from the credit bureau(s). Note that there could be fees associated with getting your full business credit report, which will contain your credit score and other information about your business.
Regularly checking your LLC’s credit score can be crucial. It may help you understand how your business's credit activities affect your credit score and can allow you to promptly address any discrepancies or issues you find on your business’s credit report.
By monitoring and understanding your LLC's credit score, you can better manage your business's financial health and make more informed decisions regarding credit and financing.
In conclusion
If you’re planning to establish your own LLC or already have one, you may be curious about what your LLC’s credit score is. You can check your LLC credit score by registering with the credit bureau that best suits your needs. Note that you may need to pay a fee(s) to obtain a full business credit report, including your business credit score.
