Just like their personal credit counterparts, business credit scores are used to gauge the financial stability of a company. They provide lenders with an idea of how likely it is that a business will repay its debts. This information is used to make lending decisions, set interest rates and determine the amount of credit a company is approved for.
A FICO score is a three-digit number that lenders use to determine your creditworthiness. FICO stands for Fair Isaac Corporation, the company that created the FICO score.
Your FICO score is based on your credit history, including how much debt you have and how faithfully you've repaid your debts in the past. The higher your FICO score, the more likely you are to be approved for a loan and to receive a lower interest rate.
The FICO score calculation methodology used in Canada is similar to that used in the United States. FICO scores range from 300 to 850, and are calculated using five factors: payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%) and types of credit used (10%).
You can get a free copy of your FICO score from most of Canada's major credit bureaus: Equifax, TransUnion and Experian. You can also purchase your FICO score from MyFico.com.
Yes, you can improve your FICO score by paying your bills on time, maintaining a good credit history and using less than 30% of your available credit.
If you’re a business with bad credit and are looking for a loan we encourage you to read Bad Credit Business Loan, where you’ll discover everything you need to know about applying for a business loan with bad credit. Furthermore, if you’re interested in learning more about making improvements to your credit score, we encourage you to read our article How to Build Business Credit.
Advice and research for Canadian small businesses from our expert team