What's in a Credit Score?


What's in a Credit Score?

Looking for a small business loan? Your credit score — a number between 300 and 850 — is based on how you've handled credit in the past, and it's a critical factor for a potential lender. A high score means you've managed your finances well and are a good risk for a loan; a low score means you've had problems in the past and might not be able to handle the debt. Even though you might be able to get a loan if you have a relatively low score, the trade off would most likely be a high interest rate.

Five factors impact your score, weighted as follows:

Business lenders today are typically looking for a score of at least 700. Get a copy of your credit report from the three major credit bureaus:

You can also get a free copy of all three reports once a year at Annual Credit Report, although you'll have to get your actual score separately. Some banks offer free credit score reports.

If your score is low, do everything you can to change any bad habits, pay your bills on time and watch what you spend. Ironically, your credit score will be low if you don't have established credit, so you might need to open a credit card account — or two. Just don't go overboard.

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