Improving your business credit score
Knowing your credit score is a vital part of good financial management. 76% of small business owners in our recent survey of business fitness said they regularly track their score. If you can understand the impact of your credit score, you can also look at ways to improve that score. And that gives you better access to both funding and trade credit.
We’ve highlighted four ways to improve your credit score. Find out the best methods for boosting your score and how this improved rating helps your business journey.
Learning how to boost your business credit score
Your credit score is given by an independent credit agency. It measures how creditworthy the business is, and how risky it is to lend to you. Lenders, banks and other companies can review your credit score before lending money to you, or extending credit facilities. Each agency has its own scale. At Experian, the score is rated between 0 to 100 on the Commercial Delphi Scale. The higher the score, the lower your risk is gauged to be.
Improving your credit score reduces the perceived financial risk. A good credit score proves your creditworthiness and shows your financial stakeholders that the business is in good health. But which elements influence this risk level? And what can you do to bring down the risk?
Here are some areas that can affect your credit score:
- The type of company accounts you file – whatever the size of your limited company, it’s compulsory to file statutory accounts with Companies House each year. It’s important to file full accounts, rather than submitting abbreviated or micro entity accounts. This might take longer to do, but there are benefits. Filing your accounts in full, on time and in line with guidelines can lead to a better business credit rating.
- Your payment performance as a business – your payment history (how quickly you paid your suppliers) can affect your creditworthiness. This is especially true for major suppliers that report their customers’ performance directly to the agencies. Paying bills on (or before) the due date sets a good example and shows you have the cash to pay in full and on time. Get into the habit of paying your supplier bills on time and track the impact this has on your credit rating.
- Insolvency proceedings and CCJs – If you have a County Court Judgement (CCJ) or insolvency proceedings against Show Blocks your business, it’s bad news for your company credit score. Manage your finances well, generate a positive payment history and keep the business well-funded. This avoids having CCJs placed on the business. CCJs stay on your credit report for six years, so it’s good practice to avoid them.
- Focus on building great customer and supplier relationships – nurturing great working relationships has a positive impact on your finances. When your clients and suppliers trust you, they tend to pay on time and offer better trade credit arrangements. Look after those relationships and your credit score will flourish.
How credit improvement boosts your score
Working with a credit improvement specialist is the fastest way to increase your score. Our team and credit improvement partners will help you to get in control of your score.
We’ll review your company information and will check the data. We’ll update your accounts and director’s information (under a confidentiality arrangement with the agencies). And we’ll repair the errors and mistakes that are holding back your credit score. It’s the fastest way to polish your credit score and open up new funding and trade credit opportunities.
To find out more about how you can improve your credit score with Capitalise for Business.
