Everything to Know about LLC Credit Score Variants
January 18, 2024 ⋅ 3 min read
An LLC (Limited Liability Company) does not have a credit score in the same way that individuals do. However, the concept you might be referring to is the business credit score associated with an LLC. Business credit scores are separate from personal credit scores and are used to evaluate a business's creditworthiness.
Here are key points about business credit scores for an LLC:
Separation from Personal Credit: An LLC is a separate legal entity from its owners, and as such, it can establish its own credit profile. This separation is one of the advantages of forming an LLC as it helps protect the personal assets of the owners.
Dun & Bradstreet (D&B) DUNS Number: Dun & Bradstreet is one of the major business credit reporting agencies. They assign a unique identifier called a DUNS (Data Universal Numbering System) number to each business entity. This number is often used to track and report on a business's credit history.
Business Credit Bureaus: In addition to Dun & Bradstreet, there are other business credit bureaus such as Experian and Equifax that compile and maintain credit information for businesses. These bureaus assess the creditworthiness of a business based on factors like payment history, credit utilization, and public records.
Establishing Business Credit: To establish a business credit profile for an LLC, the business needs to open accounts in its own name, such as business credit cards or trade credit with suppliers. Making timely payments and managing credit responsibly will contribute positively to the business credit score.
Credit Reporting Agencies for LLCs: Business credit bureaus gather information from various sources, including trade references, public records, and government agencies. They use this data to generate a business credit report and calculate a business credit score.
Factors Affecting Business Credit: Similar to personal credit scores, business credit scores are influenced by factors like payment history, outstanding debts, credit utilization, and the length of the credit history. Negative information, such as late payments or defaults, can also impact the business credit score.
Monitoring and Improving Business Credit: Business owners should regularly monitor their business credit reports to ensure accuracy and address any discrepancies. Building and maintaining a positive business credit history can open up opportunities for better financing terms and business relationships.
It's important to note that not all businesses automatically have a business credit score; it needs to be actively established and managed. Smaller businesses, especially those just starting, may have limited business credit history.
If you're looking to understand the creditworthiness of a specific LLC, you can request its business credit report from the relevant credit bureaus. Keep in mind that the criteria and scoring models used by business credit bureaus may vary, so it's beneficial to check with multiple sources for a comprehensive view of a business's creditworthiness.