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Top 5 States With The Best Business Credit Scores

Looking for States With The Best Business Credit Scores? The US Small Business Administration states that “Establishing and managing business credit can help your company secure financing when you need it and with better terms. It can also help you negotiate supply agreements and protect against business identity theft.” Business credit is a vital aspect of a business to monitor, manage and build.

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Developing a strong business credit score is the best method of developing the credibility of your business in the eyes of investors and lenders. Additionally, a high business credit score will allow your business to lend money under more favourable terms and at better rates.  

The Top 5 States With The Best Business Credit Scores

The top five states for business credit scores in 2018 were Hawaii, Washington, Illinois, Oregon and West Virginia. These scores were calculated on a scale from 0-100 with 100 being the best. A Score of over 50 indicates that a business is at low risk of paying back its creditors late. A score of between 40 and 49 represents a medium level of risk.

It is to be noted that a small margin separates the best states from the worst. Most states ranked within the range of 45-50 indicating that on average American businesses are at a low to medium risk of not paying back their creditors on time. 

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There is however little correlation between a state’s business credit score and its individual credit score. A State such as West Virginia ranked 5th for business credit scores but ranked very poorly in terms of personal credit scores.

This indicates that individual and business credit scores are affected by very different circumstances. However, the list is a strong indication of which states have had strong financial years in terms of company performance and which states have companies that are reliable to lend to. 

There is a high variance year on year when it comes to state rankings for business credit scores. Only a few states managed to maintain their position in the top spots with some states shifting wildly in position. This is due to the narrow 0-100 range on which business credit scores are ranked.

A very small change in either a positive or negative direction can have a significant result in the ranking of a state year by year. However, the actual change in credit score does not vary significantly. This indicates that most states are reliable locations for investment and for business loans.   

Business Credit 

The Really Useful Information Company (TRUiC) has a plethora of resources for developing business credit including this article in which steps on how to build business credit are outlined and explained. These include helpful steps on developing the credibility of your business as well as methods of developing business credit quickly and effectively. These steps develop to the ultimate goal of acquiring a business loan which is the most effective manner of developing business credit. 

Business credit is not the only thing that companies need to develop in order to secure loans with favourable terms. Personal credit also comes into the picture when lenders are considering whether a company will be a safe bet to lend to. This comes as a shock to many business people but it is a vital consideration for business owners to keep in mind.

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Managing personal credit cannot fall by the wayside as this will make it more difficult for your business to get the loans that it seeks. Managing your own credit effectively is just as important as managing your business’s credit. It is a poor reflection of your business to have a bad credit score and this is why you should always maintain your personal credit score. 

Final Thoughts 

Hawaii, Washington, Illinois, Oregon and West Virginia were the states with the best business credit scores in 2018. However, it is important to note that these scores do not have a direct correlation with personal credit. Personal credit is also important for acquiring business loans as lenders will check a business owner’s credit as well as their company’s credit.

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The narrow range on which Business Credit Scores leads to a high variance year on year in the state by state rankings and a relatively small margin separates the best states from the worst. Most US states are in the low to medium risk range which means that most states are suitable for business and for lending. 

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