FICO Small Business Scoring Service (FICO SBSS)


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When financial institutions receive requests for credit, they rely on data for making lending decisions. 

Here, financial institutions check the applicant’s creditworthiness. For business applicants, many lenders base their decisions on data from the FICO Small Business Scoring Service (SBSS).

What is the FICO SBSS?

FICO stands for the Fair Isaac Corporation. As a pioneer in the realm of consumer credit, FICO represents the most commonly used model for calculating consumer scores.

The FICO Small Business Scoring Service (SBSS) has emerged as a business credit scoring model. Lenders can use the SBSS for assessing the creditworthiness of businesses. 

Today, FICO boasts of how the SBSS allows lenders to access data for making decisions at the speed of those who offer consumer financing.

In the current market, the major business credit reporting entities include Equifax, Experian, Dun & Bradstreet (D&B), and FICO. The SBSS is a tool that calculates the likelihood of a business repaying its debts on time.

Consumers or businesses are generally unable to buy their SBSS directly from FICO. Only lenders that are active customers of FICO have access to the SBSS.

The United States Small Business Administration (SBA) is an organization that supports entrepreneurs. The SBA acknowledges that the SBSS is a viable tool for assessing a small business as a credit risk. 

How Does the SBSS Work?

One of the key functions of the SBA involves supporting and promoting business growth by guaranteeing loans. Although the SBA does not function as a direct lender, its backing of loans is important for ensuring that new businesses in the U.S. have access to capital.

Beginning in 2012, the FICO SBSS gained credibility and became much more widely used as the SBA adopted the service for pre-screening applicants in their popular 7(a) Loan Program. 

7(a) loans are a source of capital for small businesses for purposes such as buying supplies or furniture, refinancing existing debt, renovation projects, and more.

The SBSS allows lenders access to important details regarding the financial history of a small business. For example, assessments regarding whether a business has a history of making late payments or any previous defaults.

The SBSS summarizes the creditworthiness of a small business using a three-digit credit score. For personal credit scores, FICO uses a range from 300 up to 850. Yet, for small business credit scores, the range is 0 up to 300.

SBSS scores are based on both the credit history of the business and the personal credit history of the business owner(s). Thus, a small business owner with bad credit seeking business financing might also struggle with obtaining a small business loan.

Small business credit reports include financial tradelines, which are accounts that finance equipment, business credit card accounts, or bank loans. 

Vendor tradelines are also included, such as those involving ongoing relationships with providers of raw materials, parts, or office supplies — often payable in net 30 terms.

How is the Credit Score Calculated?

While the majority of competing business credit scoring models use a range from 0 up to 100, FICO’s SBSS ranges from 0 to 300. 

As a proprietary model, FICO does not specify the exact details of how the model calculates scores; however, the most common factors are known.

As stated before, the SBSS score combines the information contained in the credit history of the business and the business owner’s personal credit history. 

Some of the key factors may include:

Business Credit Factors (FICO SBSS)

  • The assets, liabilities, and credit score of the business.
  • The company’s revenue and cash flow.
  • The number of years that the organization has been in business and the length of credit history.
  • Any judgments or liens that exist.
  • The personal credit score and history of any business owner with at least a 20% share (see further details).

Unlike FICO’s personal scoring model, the approximate “weight” or importance of each factor in the calculation is not revealed. The SBSS 7.0 model offers lenders increased flexibility regarding the data used for calculating scores.

Personal Credit Factors (FICO Score 8)

  • Payment History (35%): Your record of borrowing and repaying debt is the largest single factor.
  • Amounts Owed (30%): This factor considers your overall amount of debt. Yet, your credit utilization rate (ratio) is often more important. Your utilization rate is a percentage calculated by dividing the sum of all credit card balances by the sum of all credit card account limits. Utilization rates below 30% are seen favorably.
  • Length of Credit History (15%): Lenders prefer those with a multi-year history of responsible credit usage.
  • Credit Mix (10%): Responsibly using two or more types of credit accounts is preferred. For example, a “mix” of installment loans and credit (revolving) accounts.
  • New Credit (10%): Avoid too many recent “hard credit inquiries” on your report, as applying for or opening multiple new credit accounts may represent a sign of possible financial problems.

Who is the FICO SBSS Score Used By?

FICO refers to users of the SBSS as small business credit grantors. Lenders who fund Small Business Administration (SBA) loans are among the leading users of the SBSS. 

Various institutions involved in small business financing might use the SBSS, including banks, issuers of business credit cards, etc.

In years past, FICO estimated that over 7,500 U.S. lenders used the SBSS. In the FICO SBSS 7.0 Fact Sheet, they explained that most users of the service provided loans or lines of credit below $1 million and below $250,000 for leasing.

Based on the inherent risks, traditional banks are often reluctant to provide small business financing. As a result, a variety of “alternative” lenders serve the small business market, many of which are exclusively operating online and often use the SBSS. 

How Do I Get My SBSS Score Up?

Those seeking financing should establish credit accounts to build business credit histories. The SBA encourages entrepreneurs to establish their venture as a separate legal entity, such as an LLC or corporation.

Get a separate business bank account, which is important when submitting credit applications. Also, bank statements are potentially valuable documentation for prospective lenders. 

Establishing credit accounts with suppliers and vendors is important. Keep in mind that some vendors might not report to credit agencies such as D&B, Equifax, or Experian. 

Establish tradelines with these vendors, such as net 15 or net 30 payment terms — and make timely payments. Other best practices include securing a Dun & Bradstreet D-U-N-S number and a business credit card.

What is a Good FICO SBSS Score?

Small businesses recognize the importance of maintaining a good credit score for business loans. 

Aside from being approved, those with a positive business credit profile likely will qualify for better interest rates. As previously mentioned, FICO business credit scores range from 0 to 300. 

The SBA separates FICO small business scores into two similar categories. These include the Small Business Risk Portfolio Solution Score (SBPS) and the Small Business Scoring Service (SBSS). 

The SBPS assesses the chance of a business becoming delinquent in debt in the next 12 to 24 months. Scores from 0 to 159 are poor and those from 180 to 300 are good.

The SBSS measures the likelihood of delinquency or default in the first 18 months of a loan. What is a “good” score can vary slightly according to the source and type of financing. 

For example, a minimum credit score of 155 is necessary for passing the SBA 7(a) pre-screening process. Some lenders require scores above 160 or 165 to qualify.

How to Improve Your FICO SBSS Score

A smart first step involves reviewing both your personal and business credit scores and reports. The SBSS is the only source that also considers your personal credit history.

Reviewing your credit bureau reports allows for identifying any errors that may hinder your score. Checking your business credit bureau report also allows you to monitor your progress and goals.

Two of the other business credit scores and reports to look at include the D&B PAYDEX Score and Experian Intelliscore Plus.

Another strategy is improving your credit utilization rate or ratio which applies to credit cards. For example, having a credit card balance of $9900 when the limit is $10,000 represents a “red flag.” Using this example, your utilization rate is 99%. 

In general, a utilization rate below 30% is good, and below 10% is excellent.

Remember that the most important factor remains your payment history. Making timely payments on all credit accounts will improve your score.

Small business owners should consider establishing and improving their credit. Those seeking to grow their business may benefit from a loan for many different purposes such as capital equipment.

Aside from capital, businesses with good credit may experience better cash flow. For example, having 30-day payment terms with vendors or business credit cards can be helpful. 

Both of these may help manage day-to-day cash flow and help with financing short-term purchases.  

In many cases, businesses with good credit also qualify for lower insurance premiums and have more negotiating leverage with commercial landlords.

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