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What Really Impacts Your FICO Score?
January 10, 2024
Small business owners looking at tablet running in their bakery.

Getting financing for your small business can be a challenge, but having a good credit score can make it easier. Your credit score is one of the factors lenders consider when you apply for business credit score, line of credit or a business loan. For most small business owners, their personal credit will be a factor in obtaining business credit, especially when the business is relatively new. A higher credit score can help you qualify for business credit at lower interest rates. Here’s a closer look at what your personal credit score measures, how it affects your ability to get business credit, and what can you do to improve your credit score.

What Is a Credit Score? 

A credit score is a number that reflects your use of credit, including credit cards, personal lines of credit and loans. It’s compiled using information in your credit report. What’s a credit report? Each of the three major consumer credit bureaus (Equifax, Experian, and TransUnion) compiles a credit report on you using information that lenders provide. 

Your credit report contains information about your credit accounts, such as loans, credit cards and lines of credit outstanding. It reveals how much debt you have, any late or missed payments or accounts in collections, how long you’ve had your credit accounts and any recent applications for new credit. Credit bureaus use this data from your credit report to generate your three-digit credit score, based on a mathematical formula called a credit scoring model

What Is a FICO Score? 

A FICO Score reflects your use of credit as calculated using the credit scoring model developed by the Fair Isaac Corporation (FICO). VantageScore is another popular credit scoring model. Credit bureaus use different credit scoring models, or formulas, to calculate your credit score. However, most lenders use your FICO Score when making decisions about your credit. The base FICO Score ranges from 300 to 850. 

You may have several different credit scores depending on the credit bureau that calculated the score, the information in your credit report at that moment, and the credit scoring model used. In general, however, checking your FICO Score will give you a good idea of what lenders will see when you apply for business credit.

What Is a Good Credit Score?

A FICO Score of 670 to 739 is considered “good;” a FICO Score of 740 to 799 is “very good,” and a FICO Score of 800 to 850 is “exceptional.” As of the second quarter of 2023, the average American had a FICO Score of 716, Experian reports. 

A FICO Score of 580 to 699 is considered “fair,” while a score below 580 is categorized as “poor.”  In general, the higher your credit score, the more likely you are to qualify for business credit and to be offered favorable terms and interest rates. A fair credit score could make it more difficult to get credit or mean paying higher interest rates. 

What Affects Your Credit Score?

Your payment history and how much credit you use are the biggest factors affecting your credit score, but there are other influences, too. Here’s a closer look. 

Payment History

Payment history indicates whether you pay your bills on time. Late payments, missed payments, and accounts in collection will appear on your credit report and negatively affect your credit score. Payment history accounts for 35% of your FICO Score.

Credit Usage

Credit usage is the total amount of credit outstanding. Using more than 30% of your available revolving credit (such as credit cards or lines of credit) can lower your credit score. Relying too heavily on credit might signal that you’re struggling to pay your bills. Credit usage accounts for 30% of your FICO Score.

Credit History

Credit history measures how long you’ve had credit accounts. A long history of using credit cards responsibly, for example, will benefit your credit score. Credit history accounts for 15% of your FICO Score.

Credit Mix

Credit mix reflects the different types of credit you have. Responsibly managing a mix of both installment loans, such as an auto loan or mortgage, and revolving credit, such as a credit card, can benefit your credit score. Credit mix accounts for 10% of your FICO Score.

New Credit

New credit inquiries occur when you apply for credit and a lender checks your credit report. Multiple applications for new credit might indicate you’re having money problems. New credit inquiries account for 10% of your FICO Score.

How Can I Get My FICO Score?

Your FICO Score may be available for free from your bank or credit card company. You can also buy your FICO Score at or get it free by signing up for an Experian account. (To get your VantageScore, sign up for an account with Equifax or TransUnion.) Although the credit score you see may not be exactly what lenders see when you apply for business credit, it will give you a good idea of where you stand.

In addition to checking your credit score, you should also check your credit report regularly. You can get a free copy of your credit report from each of the three consumer credit bureaus once per week at or by calling Annual Credit Report at 1-877-322-8228. Review your credit report to make sure that the information on it is accurate and up to date. If you don’t agree with an item on your credit report–for example, a payment you made on time appears as late—you can file a dispute with the credit bureau to have the mistake corrected. 

How Can I Raise My Credit Score in 30 Days?

Having any errors on your credit report corrected can help improve your credit score. Here are some other ways to quickly raise your credit score.

Get caught up on any past-due payments.

Bring late payments up to date and commit to making on-time payments in the future. Setting up reminders or scheduling automatic payments can help.

Pay down high credit card balances.

Using over 30% of the available credit on a credit card can lower your credit score. Paying off your balances in full each month is ideal. 

Avoid applying for new credit.

Planning to apply for business credit soon? If so, hold off on other credit applications. 

Keep old credit cards open.

Canceling cards you no longer use reduces the average age of your credit accounts, shortening your credit history and negatively affecting your credit score. 

Credit bureaus typically update your credit score at least once a month, but you may see changes more often as new information is reported to them. If your credit score doesn’t increase after 30 days, be patient. Paying your bills on time and reducing credit card debt should eventually improve your credit score, which can help you find the business financing you need.  

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National Bankers Association Foundation

The National Bankers Association Foundation’s mission is to eliminate the racial wealth gap by ensuring underserved communities have fair access to transformative financial education, services, and resources. To accomplish this, we support the work of Minority Depository Institutions (MDIs) through our four strategic pillars, which include: Financial Education, Entrepreneurship and Small Business, Research and Impact, and Collaboration and Capacity Building.

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Funded, in part, through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.

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