What Is a Credit Score? | Business Lending Glossary

A credit score rates your creditworthiness from 300–850. Learn how it affects business loan eligibility and interest rates.

Definition

A numerical rating, typically 300–850, that represents a borrower's creditworthiness based on payment history and financial behavior.

Explanation

For business lending, lenders check both personal credit scores (FICO) and business credit scores (Dun & Bradstreet Paydex, Experian Business). Personal scores carry heavy weight for small businesses where the owner's finances are closely tied to the company. Most alternative lenders approve at 550+, while SBA and bank loans typically require 680+.

Example

A restaurateur with a 620 personal FICO qualifies for an MCA but is declined for an SBA 7(a) loan, which requires a minimum 680 score at most participating banks.

Why It Matters

Your credit score directly determines which products you qualify for, your interest rate, and your loan limit — improving it by even 30–50 points can unlock significantly better terms.

Frequently asked questions

Does applying for business funding hurt my credit?

Soft-pull pre-qualifications do not affect your score; only hard inquiries from formal applications cause a temporary dip, usually 2–5 points, that recovers within 12 months.