In this article we look at what a business credit score is, and reveal some little known hacks to get your business in top shape. With a few little tweaks you could give your score a boost. After all, your business credit score can affect how potential lenders view you, as well as suppliers, so it’s worth putting your best foot forward.
What is a business credit score?
Business credit scores are based on a business’s financial history, and lenders use them alongside personal credit scores to decide whether a business is likely to repay debt.
Credit reference agencies use multiple data sources to build up a picture of how creditworthy your company might be. Typically, heavy reliance is placed on:
- Companies House information (length of trading, whether you meet filing deadlines, trends in financial accounts)
- Payment performance information (have you paid invoices on time, have you repaid finance on time)
- Public information (county court judgements, any company notices in the gazette)
How to build your business credit score
Below we share our top 10 tips on how to fine tune your business’s credit score:
- Make sure that the turnover through your business bank account is as regular as possible. Long periods without credits can raise questions from lenders.
- If you have a business overdraft make sure your account balance is periodically in credit. This demonstrates that you are not over-reliant on the overdraft.
- Develop a history of successfully repaying borrowing. If nothing else, using a business credit card can be a positive.
- Pay your bills on time and keep up with finance repayments. Don’t max out your credit.
- Don’t make lots of finance applications in a short period. Lots of credit applications on your record can make you look desperate for credit, which can negatively impact your rating.
- Check your company credit rating with a credit reference agency. Make sure the information is correct and that there isn’t any adverse information that you are unaware of.
- File your accounts and annual returns with Companies House on time. It’s a red flag if you don’t.
- Try and show a growing balance sheet on your annual accounts. A declining balance sheet weakens your credit rating.
- Have any old charges that may be registered at Companies House, such as debentures, released if they are no longer needed. Having a debenture with one lender may stop another from wanting to lend.
- Make sure your registered office is correct. A common reason for getting county court judgements (CCJs) is that letters had been sent to the registered office but the Directors had not received them.
Check your personal credit report
Clicking below will redirect you to checkmyfile.com where you’ll be able to check your credit file FREE for 30 days, then £14.99 a month – cancel anytime.