The Hidden Business Credit Score

Written by Peach Capital

October 14, 2014

SBA Fico score changes will transform the way business loans are underwritten

Did you know you have a FICO small business credit score that banks use to help make their lending decisions?

Not only that, but the SBA also uses the score to pre-screen loans it insures.

Like your personal FICO credit score, the SBSS score can single-handedly make or break your chances of getting business financing!

The hidden business credit score

Don’t worry, if you’ve never heard of FICO’s Small Business Scoring Service (SBSS), you’re not alone. Banks aren’t required to disclose that they use the FICO SBSS score and very little information exists about it online.

Here’s how SBSS works:

SBSS scores can be used for term loans and lines of credit for amounts up to $1 million. If you’re applying for $1 million or less, chances are your lender will use SBSS to help make its decision.

Like personal credit scores, FICO SBSS rank-orders applicants by their likelihood of making payments on time. The score ranges from 0 to 300. The higher the score, the better.

The mininum score to pass the SBA’s pre-screen process is currently 140.
The scoring is based upon personal and business credit history and other financial information. A strong history of business credit with timely payments to vendors and suppliers may help boost your SBSS score.

If you have derogatory or no credit history, it can take months or even years of positive credit activity to move your SBSS score significantly higher. It’s vital to build your credit and ensure it’s healthy before you need it.

Because businesses are not covered by FCRA protections, you can be denied business financing due to your SBSS score, and lenders are not required to notify you of the reason why.
As banks and alternative lenders continue to compete to make faster, more accurate lending decisions, credit scoring models like FICO’s SBBS will only become more prevalent.

And it’s not just used by lenders, but by anyone who needs to quickly evaluate a business’s financial health. Know where your score stands and learn what influences it, so you can put yourself in the best possible position the next time you need access to capital.

To Our Success Together,

P.S. As always, please take a minute to leave a comment on my blog. I want it to be a conversation rather than a rant from my soapbox.

P.P.S. And don’t forget my constant reminder: we’re still lending! Call 800-722-5956/email: fax 877-624-4455/live chat with us on the next wealth-creating commercial property ownership loan you know about.


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