What Entrepreneurs & Small Business Owners Need to Know About Free Credit Score Sites
Before you use one of the many free credit score sites online, you should know that not all of them are 100% accurate or detailed. What I mean is, many free credit score sites do not provide you will a full credit report. They usually just how you your credit score and what’s currently impacting your score. Furthermore, each free credit score site provides different types of credit scores. For example, the websites credit karma and credit sesame provide what’s called a VantageScore. So if you want to get a free FICO score, these sites aren’t going to help.
For entrepreneurs and small business owners, knowing both your FICO credit score and VantageScore is critical to understanding whether you will qualify for small business financing. Most banks and lenders still use the FICO score model to determine the credit worthiness of their applicants. However, the VantageScore is becoming more popular. So when using a free credit score site, it’s important that you get both scores. Knowing both is good because the factors that make up each score are slightly different.
How Your Personal Credit Scores are Determined
Your FICO score is determined based on your payment history (35%), amounts owned (30%), length of credit history (15%), new credit (10%), and credit mix (10%). Your VantageScore is determined based on payment history (40%), age and type of credit (21%), percent of credit limit used (20%), total balances/debt (11%), recent credit (5%), and available credit (3%). As you can see, how your credit score is calculated is slightly different for each scoring model. Again, this is why it’s important to know both your FICO credit score and VantageScore before you apply for small business financing.
You Need to Know More Than a Free Credit Score Before You Apply for Small Business Financing
Getting a free credit score is not enough when you plan on applying for small business financing. You also need to see the data that make up those scores. The data that make up the scores is your credit accounts. Your credit accounts make up your credit history. Your credit accounts, credit history, and credit scores give you the full picture of where you may stand with lenders in terms of credit risk and credit worthiness.
Banks and lenders will review your credit accounts, credit history and scores when assessing your credit worthiness. You need to be able to see what they are going to see before you apply for small business financing. It will help you better prepare yourself if your credit score isn’t where it needs to be. It will also help you understand what chances you have of qualifying for small business financing before you actually apply.
Get Your Free Credit Score from NAV Before You Apply for Small Business Financing
Here at LenCred, thousands of entrepreneurs and small business owners come to us seeking capital each year. Checking the credit scores and reports of the people who apply for funding through us has been critical to our success. After years of helping entrepreneurs and small business owners get capital, we have discovered the best free credit score site online for this specific group of people. As I stated before, knowing both your FICO score and VantageScore is important if you plan on applying for small business financing. However, knowing your business credit score is also important. That’s why we require the entrepreneurs and small business owners who apply for our funding programs to obtain their free FICO score and VantageScore from NAV.
NAV was designed specifically for entrepreneurs and small business owners who need a credit monitor service that enables them to track their personal and business credit scores. As an entrepreneur and small business owner, both your personal and business credit score can impact your ability to get small business financing. NAV provides personal credit reports and scores from Experian and Transunion. Experian provides you with your FICO score and Transunion provides you with your VantageScore. On the business credit side, NAV provides the Dun & Bradstreet PAYDEX Score, Intelliscore PLUS Score from Experian and the FICO LiquidCredit Score.
Business credit scores are primarily determined based on how timely you pay on your business accounts. If your business is well established, lenders will check your business credit history to determine if you’re consistently making timely payments towards your business accounts. Business accounts can include retail trade lines with companies like Quill or business credit cards with lenders like Bank of America.
NAV Offers a Free Credit Score Option for Entrepreneurs & Small Businesses
Free credit score sites like credit karma and credit sesame aren’t going to cut it for entrepreneurs and small business owners. Their accuracy is always questionable and they simply don’t provide enough information for you to prepare yourself to apply for small business financing. While free is good in some instances, it’s not when it comes to a credit report company. Entrepreneurs and small business owners need a free credit score site that gives insight on their business and personal credit scores and history.
NAV does offer a free credit score option for startups, entrepreneurs, and small business owners that are beginners in building business credit. However, the free option provides limited information. You will only be able to see your personal credit score and credit report summary from one major credit bureau. Furthermore, you will only be able to see letter grades from two of the major business credit bureaus. While a free account is good to get you started, eventually you’ll want to upgrade to a paid plan.
Paid plans provide you with detailed information via all 3 major credit bureaus on the personal and business credit side. NAV paid plans range from $14.99 to $49.99. At LenCred, we usually recommend that our applicants purchase the $14.99 or $29.99 plan. The $29.99 is affordable for most and provides you (and us) with enough information to properly access your credit history to determine if you will qualify for small business financing.