Equifax’s three primary business credit scores are their Credit Risk Score, Payment Index Score, and Business Failure Score. You can typically call your scores in each of these models good if they’re above 556, 90, and 1,315, respectively.

A good Credit Risk Score or Payment Index Score generally indicates that your business is likely to make its payments on time. Meanwhile, a high Business Failure Score means that your company isn’t in danger of going under any time soon.

If you’re a small business owner, here’s everything you should know about the three primary business credit scores from the oldest credit reporting agency, including their respective ranges and determining factors.

Equifax Business Credit Score Ranges

Like most credit scoring models, the higher your Equifax business credit scores are, the lower the risk your small business represents to vendors, lenders, or customers that might want to work with you.

Here are the upper and lower limits for all three scores from the oldest business credit bureau:

Equifax Business Credit Score Ranges

Source: Brex

You can break down consumer credit scores from Fair Isaac Corporation and VantageScore into meaningful smaller ranges, but that’s not necessarily the case with the Equifax business credit scores.

In fact, only the Payment Index Score falls into distinct and significant categories. Each one represents the time it’s taken you to pay off your debts, historically.

Here are all of the score ranges and what they say about your payment history:

• 90 to 100: You’ve made all of your payments on time or early.
• 80 to 89: You’ve made at least one payment between one and 30 days late.
• 60 to 79: You’ve made at least one payment between 31 and 60 days late.
• 40 to 59: You’ve made at least one payment between 61 and 90 days late.
• 20 to 39: You’ve made at least one payment between 91 and 120 days late.
• 1 to 19: You’ve made at least one payment more than 120 days late.

The other two Equifax business credit scores generally don’t have meaningful subcategories. They’re simply sliding scales, where higher scores mean lower risk and vice versa.

How Equifax Business Credit Scores Are Calculated

All three of the Equifax business credit scores have their own proprietary formulas. Let’s take a look at how to calculate each of them, starting with the Credit Risk Score. 

Credit Risk is the most similar of the three to a personal credit score. Its purpose is to predict the likelihood that your small business will be delinquent by more than 90 days or default on its debts. The lower the score, the higher the risk.

As you’d expect, lenders can use the score to decide whether your business qualifies for a credit account and what kind of interest rate it would deserve.

Unsurprisingly, the factors that go into your business Credit Risk Score are similar to those that go into consumer credit scores. For example, all of the following have an impact:

• Payment history: Paying your vendors and lenders on time is the number one indicator that your business will continue to do so. If you have a history of late payments, your score will tell lenders that you’ll probably pay them back late too.
• Credit utilization ratio: The more debt you have, the harder it is to manage. One of the best ways to assess whether your debt levels are healthy is to calculate the ratio of your debt balances to your credit limit. If you’re using a low percentage of your available credit, your business is at a lower risk of delinquency and default.
• Age of credit accounts: If your business credit reports show that you have a long history with credit accounts, it’s much easier for lenders to trust that you know how to manage them. More experience often indicates greater understanding, at least to some extent.

Note that this isn’t a comprehensive list, and some factors that affect the score don’t have a direct counterpart in your consumer credit report or scores.

For example, a business with a higher number of employees would have a better Credit Risk Score than one without, which you can’t easily translate to an individual.

Next, let’s touch briefly on the Payment Index Score. Fortunately, the calculation for this one is relatively simple. The only thing that impacts the score is the timing of your payments. If you make all of them on time or early, you’ll have a score above 90.

Finally, there’s the Business Failure Score. It represents the likelihood that your business will collapse within the next twelve months. Vendors and lenders care about this because that would make it much less likely that they’d be able to collect from you. 

A business failing is very different from paying late or defaulting on its debts, but the contributing factors for all three of the events are similar.

As a result, you can generally assume the same things that affect your Credit Risk Score will also impact your Business Failure score, including your payment history, outstanding debt levels, and the length of your credit history.

How To Improve Your Equifax Business Credit Scores

Each Equifax small business credit score represents a different trend or risk, but their algorithms contain a lot of the same variables. As a result, many activities will improve two or three simultaneously.

With that in mind, here are some of the best steps you can take to improve your Equifax business scores:

• Make your payments on time and in full: As usual, building a positive payment history is the best way to demonstrate your creditworthiness. Making payments on time will increase all three of your Equifax business scores. It suggests to your lenders that your company is unlikely to miss future payments, default on your debts, or go out of business.
• Reduce your credit utilization: Paying down your business loan or business credit card balances will improve your Credit Risk and Business Failure scores. A company with lower outstanding debts is always a safer prospect than one that maxed out its available credit limit and has high debt payments every month.
• Keep your first credit accounts open: The age of your oldest credit account shows lenders how long your company has been in business and how much experience it has with credit. Newer businesses are at a higher risk of making mistakes with debt and eventually going under, so keeping your oldest accounts open benefits your Credit Risk and Business Failure Scores.

When in doubt, make decisions that would make you feel better about putting money into the company yourself. If you build business credit using these strategies, you’ll inevitably end up with a good business credit score.

Lastly, to access these scores, request a copy of your Equifax business credit report. You’ll find all three in there, along with miscellaneous information on your business credit history similar to what you might see in a personal credit report.

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