What is my business' credit score?

Esther Shaw / 20 April 2015 ( 01 November 2016 )

It's not just individuals that have credit reports, businesses have them too. Esther Shaw explains how a business' credit score is calculated and why it is important to have a good credit history.

Every business has a credit score – this is a figure which rates a firm’s financial health.

Companies are usually scored with a number between 0 and 100.

The higher the score, the more robust the business appears – and the less likely it is to fail.

Check your business' credit report now

How important is this score?

Your business credit report is important, as it says a lot about you to lenders, as well as to your suppliers and customers.

If you know your business credit score, this can help you demonstrate that your business is stable.

A UK-approved credit reference agency, such as Experian, can help provide an indication of your score.

Lenders will look at your credit score

If you are looking for a loan to expand or improve your business, a lender will use this information – along with any details you supplied with your credit application – to work out whether to grant you a loan.

This decision will also be associated with the level of risk the lender is willing to take.

A high credit score not only means you’re more likely to get a loan, but also that you are likely to access better rates and payment terms.

Suppliers and customers will also consider your score

Your credit score can also influence the way you appear to other companies – and may affect how willing suppliers are to do business with you.

It can also be the deciding factor in customers deciding whether or not to trade with you.

It is a two-way street! Read how credit checking your customers and suppliers can protect your business.

How is a business credit score calculated?

A credit score is calculated based on all the information held on your credit report.

Most scores take a number of factors into account. This includes:

  • Whether you have any outstanding debts to other businesses or accounts;
  • Your payments history and whether you have any late payments;
  • Information available from public records, such as bankruptcies and county court judgements.

If details such as debts, late payments or CCJs show on your credit report, these will negatively affect your score.

How can I improve my business' credit report?

If your business' credit score is not as good as you’d hoped, there are steps you can take to improve it.

You should always pay your bills promptly, as if you can’t pay suppliers when you are meant to, your business will be viewed as a higher risk to lenders.

Be very careful about making multiple applications for credit, as these could leave a series of “footprints” which other lenders can see. This could indicate that your venture has financial problems.

Read more about improving your business' credit report

Maintain a healthy cash-flow, as this will demonstrate to a lender that you are able to manage your company’s finances.

If there are any errors on your business credit report, get these corrected.

Also bear in mind that missing information can count against your business just as much as having negative data – especially if you are a growing venture.

If this is the case, it is worth writing to the credit reference agency to tell them about your business, including the number of employees or start-up capital. Information such as this can help make lenders more willing to lend.

Did you know you can access your Experian business credit report on a simple pay as you go basis?

Experian Credit Expert Get a free 30-day trial with Experian Credit Expert with this special offer.

The opinions expressed are those of the author and are not held by Saga unless specifically stated.

The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.