Credit score

A credit score condenses your borrowing history into a single number that lenders use to judge risk quickly. The most common models, FICO and VantageScore, generally run from 300 to 850. The score is built from your record of paying on time, how much you currently owe compared with your available credit, how long you have had credit, the types of accounts you hold, and how often you apply for new credit. Missed payments and high balances tend to pull a score down, while a long, steady record of on time payments pushes it up.

When you apply for business financing, lenders often check the owner's personal credit score, and for established companies they may also look at business credit. A higher score generally opens up more options and lower pricing, while a lower score can narrow your choices or raise your cost. You can work your score upward by paying every bill by its due date, keeping card balances well under your limits, leaving older accounts open, and disputing any errors you find on your reports.