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Does my company have a credit score and how can I improve it?

PUBLISHED ON: 26/09/2023

How can I check my business credit score?

Limited companies do have credit scores and they’re used for a similar purpose as individual credit ratings. Lenders use them as a guide to creditworthiness, but a business credit score is also useful for suppliers and investors to gain insight into your company’s financial situation.

Essentially, they’re a tool that facilitates borrowing and business growth, which makes them an important element of your company profile. You can build up a strong credit score by making loan and regular bill payments in full and on time.

Long-term, this demonstrates financial stability and reliability and helps potential stakeholders to view your business positively.

What is a good company credit score?

Company credit scores typically range from 0 to 100, with 100 being the highest level of creditworthiness. These scores indicate to lenders the risk of default that you present to them:

  • 0-40: high risk
  • 41-79: medium risk
  • 80-100: low risk

Lenders will look at your history of repayment, how long you’ve been in business, your industry, and other factors before making a lending decision, so why is having a good company credit score so important?

A good credit rating can protect your business during times of economic uncertainty, allowing you to access the investment or borrowing you need. So if your company credit score is currently in the low or medium range, what can you do to improve it?

How to improve your business credit score

Pay bills early or on time

This is key to building a high credit score as it shows the business can pay what it owes – a crucial consideration for lenders.

Credit utilisation

Credit utilisation is the amount of credit you use in relation to the total available to you, and keeping this to around 30 per cent demonstrates financial responsibility.

File your accounts on time

If you’re late filing your company accounts or paying your tax bills it could indicate that there’s a financial issue with the business, even if this isn’t the case.

Limit your loan applications

Making multiple loan applications in a short timeframe will trigger ‘hard searches’ by lenders and can seriously damage your business credit rating. It’s advisable to seek assistance from an experienced commercial finance broker before applying as they can guide you towards the best form of borrowing without it affecting your credit score.

Finance options that don’t rely on your business credit score

There are funding options available that aren’t reliant on a good credit score, such as invoice finance, which can be ideal for businesses with a healthy sales ledger. If you’re in the construction industry, supply chain finance can also help as it’s based on larger contractors’ creditworthiness.

UK Business Finance highly experienced commercial finance brokers and can provide further guidance on how to build a company credit score. We can also advise you on the most suitable form of lending for your needs – please get in touch to arrange a free consultation.

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