How To Interpret a Corporate FICO Score

The importance of understanding and maintaining a good credit score in not just for individuals. This importance of good credit also extends to businesses and incorporations. Along with maintaining a good credit history it is equally as important to be able to understand and interpret a corporate FICO score so that even businesses can keep track of where they stand financially. In the circumstance that a business applies for a loan the FICO score will be the determining factor in the interest rate. FICO scores are used by creditors to access the probability of an applicant to repay debt. This FICO score is extremely important to businesses that may need to borrow money in the future.

Step 1

The FICO score consists of five separate categories. These categories are used to evaluate the financial habits and history of the business applicant. The five categories are payment history, amounts owed, length of credit history, new credit and types of credit the entity currently uses.

Step 2

Take account of the different categories you have that are not in the best standing. These are the things that effect your FICO score the greatest. You want to be able to under that the way to balancing out credit is to make sure you keep your open and closed accounts in good standing. If you still owe a debt to a company but the account is no longer open, it may be reflected negatively from all 3 credit report bureaus.  Keep outstanding balances down. Be advised the longer a corporate credit account remains open, active and in good standing the higher the FICO score’s value will be. If by chance the corporation or business opened accounts recently and/or the accounts are not in good standing this will lower the FICO score for that business.

Step 3

Most corporation credit cases, the amount a business or corporation owes on credit lines, the lower the FICO score. Revolving debt accounts that involve credit line with a higher balance will lower the FICO score as well.  Secured balances like Real Estate loans do not carry as much negative effect if found.

Step 4

Find out where your business or corporations stand. The corporate FICO score that exceeds 800 is considered excellent credit. Scores that range in the 700 value is very good. The FICO scoring system is tiered. The FICO score of entities and corporations reflect better on the applicant one their FICO scores reach a certain level. For example, a corporation with 400 FICO score rating would be a great credit risk. Whereas, the corporation with a FICO score of 800 is not considered to be the same credit risk.

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About the Author: Marie Mayle is a contributor to the MegaHowTo team, writer, and entrepreneur based in California USA. She holds a degree in Business Administration. She loves to write about business and finance issues and how to tackle them.

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