Credit Score
A numerical rating of creditworthiness based on credit history.
A personal credit score (typically FICO, ranging 300–850) reflects your creditworthiness based on payment history, amounts owed, length of credit history, new credit, and credit mix. Lenders use it to evaluate loan applications, set interest rates, and determine credit limits. Scores above 740 are considered excellent and qualify for the best terms.
Example
A business owner with a personal credit score of 780 qualifies for a business loan at 6.5% APR, while a competitor with a 620 score is offered 12% for the same loan amount.
Why It Matters for Your Business
Your personal credit score directly affects your ability to get business financing and the rates you'll pay, so protecting it is a business priority.
Practical Tips
- •Check your credit report annually for errors and dispute inaccuracies immediately.
- •Keep credit utilization below 30% across all cards to maintain a strong score.
More Banking Terms
ACH
Automated Clearing House - an electronic network for financial transactions.
APR
Annual Percentage Rate - the yearly cost of borrowing including fees.
APY
Annual Percentage Yield - the real rate of return on savings including compound interest.
Bank Reconciliation
Matching bank statements with internal records to identify discrepancies.
Business Checking
A bank account designed for business transactions.
Related Financial Guides & Resources
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