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business credit score, funding

How to lower your monthly debt repayments with a credit review

Capitalise Feb 07, 2024

Having lower monthly obligations is ideal for any business, it allows you to free up your cash flow, or invest money back into your business. One key factor that significantly impacts your ability to secure affordable loans and favourable repayment terms is your business credit score. In this blog, we will explore the importance of a good business credit score, how you can enhance it, and the benefits it can bring. 


What impacts debt repayments?

Lenders use business credit scores as part of their decision making process. Having a credit score in a D band or lower can restrict your access to finance as this is below the minimum requirement many lenders set. Whereas having a good business credit score will open more long term options and lenders will offer much more affordable interest rates.

This means that having a good business credit score can impact your debt repayments, you could spread repayments across longer terms, or pay back less in total due to lower interest rates.

Can you improve your business credit score? 

It's possible to improve your business credit score by adopting positive actions, such as: 

  • Paying all bills on time 
  • Building up your credit history, by using a business credit card for example
  • Avoiding any legal notices, such as a CCJ
  • Using your business bank accounts regularly 
  • Ensuring your information is accurate and up to date
  • Avoiding too many business loan applications at once

While taking the above actions will help to improve your business credit score, it’s worth bearing in mind that this could take some time due to the infrequent way that credit bureaus update their assessment. This means that credit bureaus could assess your credit score based on out of date or inaccurate data, which could be harming your business credit score as it doesn't reflect how your business is really doing. Instead, if you’re looking to lower your monthly debt repayments, you can get your credit score reviewed.

Our Credit Review Service allows businesses to provide up to date and detailed information to Experian so that they can accurately reassess the business credit profile. In 96% of cases this results in an improvement. Taking only a few days to see a result, the Credit Review Service is a quick way to give your score the boost you’re looking for. 


How can an improved credit score lower your monthly debt repayments?

Once you’ve successfully reviewed your business credit score, you could use it to lower your monthly debt repayments in various ways:


Better loan terms

One way an improved business credit score can lower your monthly repayments is by securing better loan terms. Lenders use your credit score as a risk assessment tool to determine how likely you are to repay the business loan. A higher credit score indicates lower risk, which makes lenders more willing to offer you loans with lower interest rates.

By accessing lower interest rates, your monthly repayments will be reduced as the total cost of the loan will be lower. This can result in substantial savings over the life of your loan. If you have existing loans, refinancing onto one more affordable facility will bring your monthly repayments down substantially.


Access to larger loan amounts

Lenders are more likely to offer higher business loan amounts if you have a good business credit score and a strong credit history. With a larger loan amount, you can consolidate existing debt, invest in growth opportunities, or cover operational expenses more effectively.
By having access to more capital, you can better manage your business's finances and ensure that your monthly repayments are structured in a way that aligns with your cash flow. This flexibility can help you avoid financial strain and maintain a healthy bottom line.


Extended loan repayment terms

Long term business loans carry higher risk for lenders than short term loans because as the term goes on, there is more possibility for issues to occur and more opportunity for a business to miss their repayments. This means if a business has a low credit score, they will likely only be able to access shorter term options. If your business credit score has improved, you could refinance existing loans onto a longer term option.
Longer loan terms can spread the principal repayment over a more extended period, making it easier for your business to manage its cash flow.


Access to more financing options

As your business credit score improves, the world of funding opens up to you. Having a good business credit score means that you meet the threshold for more lenders, so you'll have access to a wider range of financing options. This enables you to choose a loan that is tailored to your specific needs, allowing you to structure repayments in a way that suits your business's financial situation. 


See if you can lower your repayments with the Credit Review Service. 
Unsure what your business credit score is? Sign up to Capitalise for Business and view your business credit score for free.

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