A simple guide to business credit scores

Find out what a business credit score is, why’s it important and how you can view and improve your business credit score.

If you’re a sole trader, it’s your personal credit score that will matter when you’re looking for credit, but if your business is set up as a limited company, lenders may also check your business credit score when you apply for a financial product.

What is a business credit score?

Like personal credit scores, business credit scores are based on financial history, and they’re used by lenders to decide whether businesses are likely to repay debt.

If you’re opening a business bank account, applying for a business loan, or even just arranging a mobile phone contract, your business credit score may affect whether your application will be accepted and impact the rates you’ll be offered.

If you have a poor business credit score - perhaps because your business has missed loan repayments in the past or you’ve made several failed credit applications - you may struggle to find finance for your business, or you may be offered very high interest rates.

If you have a good business credit score, you’re likely to find it easier to get credit and you may be offered more competitive interest rates.

How to find out your business credit score

It’s important to understand that your business doesn’t have a single business credit score. There are several credit reporting companies and each company uses its own methods and scoring system. Different lenders will use different credit reporting companies when they’re checking your credit score.

To find out your business credit score, you need to contact one of the business credit reporting companies. They may send your report in the post, or they may give you access to your credit score via an online account.

Experian, one of the major credit referencing companies, has an online subscription model for viewing your business credit report. You can sign up for monthly access for £29.99 (+VAT) per month, or annual access for £275 (+VAT) per year.

How to build your business credit score

These are some things you can do that may help to improve your credit score.

  • Check your credit rating with some of the major credit rating agencies. If you see any information that isn’t correct, you can ask the agency to correct it.
  • If you haven’t already, open a business bank account in your business’ name.
  • Consider taking out some business credit, like an overdraft and a business credit card, to establish your business credit score. Always make sure you’ll be able to make the repayments.
  • File full accounts with Companies House and make sure they’re filed on time. Consider having your accounts audited.
  • Pay your bills on time and keep up with credit repayments. Don’t max out your credit.
  • Close accounts if you don’t need them any more. If it looks like you have lots of credit available, this may weaken your business credit score.
  • Don’t make lots of credit applications. If you’re rejected for business credit, don’t immediately apply to another lender. Lots of credit applications on your record can make you look desperate for credit, which can negatively impact your rating.

You should conduct your own thorough research, including speaking to experts, before applying for credit.

Do you have any other questions about your business credit score? Ask them in the comments.

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