Common mistakes that can impact your business credit score

Having a good business credit score is an important factor in your business success. Whether you are looking to win new contracts, negotiate favourable terms with suppliers, or access a business loan, your business credit score could be the difference between opening new doors or being held back.

A business credit score is a number used by lenders, suppliers, insurers, and partners to assess how likely your business is to meet its financial obligations. The higher your score, the lower the perceived risk. Unfortunately, many businesses make common mistakes that can negatively impact their credit scores, often without realising it. This article explores these common pitfalls and offers practical advice on how to avoid them.

What actually affects your business credit score?

In the UK, business credit scores are calculated and maintained by Credit Bureaus such as Experian. These agencies collect and analyse financial data about your company from multiple sources. Understanding what influences your score puts you in a stronger position to maintain it and improve it over time.

The main factors that influence your score include your annual accounts filed at Companies House, any adverse events like County Court Judgments (CCJs), your credit history length, and your payment performance reported by banks and suppliers.

8 mistakes that can impact your business credit score

Below are some of the most common behaviours that can weaken your business credit profile. Understanding these behaviours will help you avoid unnecessary risks and keep your business credit profile in good shape.

Not checking your business credit report regularly

One of the most common mistakes businesses make is failing to regularly check their business credit profile. While not keeping an eye on your business credit report won't directly cause a bad score, it can indirectly lead to issues. Without regular monitoring, you might overlook errors in your data, fail to notice identity fraud, or miss unaddressed issues like late payments or unresolved legal notices.

Credit bureaus update their records frequently, and monitoring your score regularly means you can take action before it affects your access to finance or supplier terms.

Late or missed payments to creditors

Just as with your personal credit score, late or missed payments can significantly impact your business credit score. When your business makes payments to banks, suppliers, or lenders, those companies may report your payment behaviour to credit bureaus.

Paying invoices, credit cards, and any credit agreements on time shows that your business is financially reliable and it can help your credit score. To avoid this mistake, you can set up direct debits to repay balances in full each month, which helps you avoid interest and ensures you meet your obligations consistently.

Failing to establish a credit history

If your business is relatively new, you may have a thin credit file, which means there is not enough data to judge how reliable you are. A long, steady credit history usually helps your score.

Startups often struggle with this reality because traditional finance isn't always designed for companies with little trading history. One way to bridge this gap is by opening a business credit card or taking out a small business loan. Using a card responsibly and paying the balance on time helps build your business credit history and improves your score over time.

Applying for too much credit in a short window

When you apply for a loan or credit card, lenders will generally carry out a search on your business credit profile. Multiple searches within a short period can make your business appear high risk to lenders.

This is especially important for newer businesses or applicants with limited trading history. It is better to research eligibility criteria before applying to ensure you meet the lender's requirements, such as minimum turnover or incorporation status, to avoid unnecessary rejections.

Ignoring the impact of supplier relationships

Your business credit profile often reflects your payment performance with larger suppliers. If you consistently pay your suppliers late, this behaviour is reported and can lower your credit rating.

Stronger supplier relationships are built on trust. When your business is in a high score band, suppliers may offer you more favourable credit terms, higher credit limits, and even better pricing. If your score is low, you may find that you are forced to pay for goods upfront, which can create a squeeze on your working capital.

Filing Companies House accounts late

Your filed accounts with Companies House are one of the biggest factors in your business credit score. They provide key indicators of your financial health, including revenue, profits, assets, and liabilities.

Credit bureaus typically reassess scores following the filing of financial statements. If you file your accounts late, or if there are sudden changes to company directors or structure, it can raise concerns about your business's stability and negatively affect your score.

Not addressing legal notices and CCJs

Negative events such as County Court Judgments (CCJs), Gazette Notices, or winding up petitions have a major effect on your score. These events signal a high risk to anyone thinking of lending your business money.

If a legal notice is recorded, it shows up shortly after it is registered in public records. Failing to address these issues quickly can lead to a long term decline in your creditworthiness, making it difficult to secure even basic business services or trade credit.

Neglecting your business savings and cash flow

While not a direct component of a credit score, how you manage your cash flow and savings reflects your financial discipline. Lenders often look at whether a business has surplus funds and a track record of managing money well.

Building a cash buffer in a business savings account shows you can handle debt responsibly. Regularly earning interest and maintaining a funded savings account can indirectly strengthen your business credit profile by demonstrating lower financial risk.

Protect your business by staying proactive

Most business credit score issues aren’t caused by major failures, they’re caused by small, avoidable mistakes that go unnoticed over time. By staying proactive, you can protect and strengthen your business credit score and put your company in a stronger position for growth. A strong business credit score helps you:

• Borrow at better rates

• Win larger contracts

• Build trust with suppliers

• Reduce financial risk

• Grow with confidence

With a Capitalise account, you can monitor your business credit score in real time, spot risks early, and make informed decisions that support long term success.