What your business credit score means and how to improve it


There’s always plenty to learn when starting and running your own business

No matter how much experience you have in your particular specialism, when it comes to launching a business a whole new set of skills are required. To ensure your business’ success, its necessary to get to grips with the basics of these.

From the get-go you’ll find yourself becoming an expert in sales, marketing, winning new business, facilities management and even being an employer! In addition to these, you’ll find its important to understand your finances if you want to run a profitable business; credit checks form an integral part of that.

When there are bill, employees and suppliers to pay, learning about your credit score might not be top of the list. But learning what is it, understanding why it’s important and being able to use it to your advantage is a small step which can make a big difference to your entrepreneurial journey.

A solid understanding of business credit checking is more important than ever in a fast-paced business world so that you can secure finance and work with customers that won’t lead you into bad debt.

So, whether you’ve just launched your business or have been operating for a while, we’d like to share with you everything you need to know about business credit reports, how to check a company credit rating and more.


What is a business credit score and why is it important?

All adults have a credit score, this is a rating that lenders use to measure how likely you are to default on a credit card or loan. If you’ve ever applied for some type of credit, you’ll probably be aware of your credit score which is generated via credit reports by Credit Reference Agencies (CRAs).

Making bill payments on time, staying within your overdraft limit and avoiding bad debt all contribute towards building a good personal credit rating for yourself. This in turn enables you to access preferential rates on finance products.

Business credit scores work in the same way, though many business owners know little about them nor have even considered checking their rating.

If you’re a sole trader, lenders will use your personal credit score to determine your creditworthiness but if you set up a limited company, you can build your business credit rating independently.

Much like boosting your own credit rating can help you secure a good deal on a mortgage for your dream property, maintaining a good business credit score can help you to achieve your business goals. Being in a position to access finance can be the difference between taking your company to the next level or remaining stuck in a professional rut.

A good business credit score can also save you money in the long term as you will be able to access loans with lower interest rates. If your score is low, the opposite is true and you may only be offered higher rates which could have a detrimental impact on your growth and overall finances.

A company credit rating can be a brilliant tool to help you secure the best investment opportunities for your small business and is also essential for managing cash flow. Running a business credit check before entering into a long-term contract with a new supplier will give you the foresight on how likely they are to settle debts on time or help you spot any red flags in advance so your working relationships don’t result in years of chasing up bad debt.

In turn other businesses will be running the same checks on you so it pays to maintain a high company credit rating yourself for this very reason.


Things that can affect your company credit rating and how to improve it

When assessing a business credit rating be it a supplier’s or your own, a score of 0 to 100 is given. A score of 0 represents a high-risk credit rating and a score of 100 indicates a very low financial risk. It’s important for business owners to get as close as possible to a score of 100.

A score can fluctuate up or down depending on a number of factors. Those factors that can help you achieve a healthy credit score are outlined below.


1.     The type of accounts you file

All types of companies must file their accounts at the end of every financial year. You can improve your score and gain a better business credit rating in the long run if you file your accounts fully rather than submitting abbreviated or micro entity accounts. It is worth the extra time in the long run, so speak to your accountant to request this is done. Its also important to file on time and within the guidelines, this all contributes to an improved score.

2.    Your payment performance

To avoid any negative outcomes, get in the habit of paying all your business bills on time. Just like with your personal accounts, your history with paying bills in a timely manner can affect your credit score.

3.     CCJs and insolvency proceedings

Having either of these against your business, it’s bad news for your company credit score and possibly your personal one too, depending on the terms of the credit you took out. Following the guidance above, should help avoid any action like this.


How else can I improve my business credit rating?

In addition to the above, there are other steps you can take and good habits you can form which can help towards gaining a higher business credit score.

  • If any of your business information changes, such as your registered office address, update it quickly across all relevant channels. Notify suppliers and customers of any updates, as well as organisations like Companies House.
  • Make sure your personal finances are healthy. If you’re a start-up with little financial information available, data from the business owner’s personal accounts may be used to calculate your business credit score.
  • Share your company’s information so that Credit Reference Agencies (CRAs) can validate all the data on your record easily.
  • If you have a good working relationship with your suppliers, ask them to provide feedback and share payment record data with CRAs.
  • Only make credit applications when absolutely necessary. It can be tempting to explore the finance options available for your business, but submitting too many in a short period of time could suggest that you’re struggling to secure funding. This can also trigger a credit search on your business, which is recorded on your credit record and can impact your credit score. When making an enquiry about finance, ask for a quote instead to limit the potential impact to your credit rating.
  • Keep a keen eye on your business credit score and sign up for alerts that notify you if your credit record changes. Then you can promptly address any problems.
  • Monitor the business credit score of your partners, suppliers and customers too, limiting damage to your business should they fall into financial difficulty.

If you need help managing your business finances, call us today on 01322 555442, alternatively email us at

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