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How to Check and Monitor Your Business Credit Score

Your business credit score is a numerical number of your company’s creditworthiness and the financial risk associated with lending to your business. So, it is not a number to be taken lightly. Monitoring and maintaining a good credit score could mean the difference between your business’s failure and success. To help, we have put together a comprehensive guide on understanding and monitoring your business credit score. 

Understanding Business Credit Scores

Before you can accurately check and monitor your business credit score, you need to understand it. Just as individuals have a credit history that shows how responsible they are with borrowing and repaying money, businesses have their own credit history that reflects their financial track record.

A business credit score is a numerical representation of a company’s creditworthiness, and it helps lenders, suppliers, and other stakeholders assess the risk of doing business with that company. A higher credit score indicates that a business is more likely to pay its debts on time and fulfil its financial obligations.

7 Factors That Influence Business Credit Scores

Your business credit score is built on a range of factors and influences that will determine the numerical value. Here are the top seven factors that will impact your business credit score: 

  1. Personal credit scores of shareholders/directors 
  2. Business trading history 
  3. Turnover 
  4. Profit 
  5. Recently filed accounts 
  6. Payment history 
  7. Number of past credit applications 

Credit Reporting Agencies and Their Scoring Models

While the general factors are the same, which may impact your business credit score, you may notice a different score depending on the different credit reporting agencies you use. For example, your credit score on Experian may differ from yours on Crediva. 

In the UK, there are four major credit reference agencies; Creditsafe TransUnion, Equifax, Experian, and Crediva, each with a unique scoring model. 

TransUnion Credit Scoring

The credit scoring system used by TransUnion is known as ‘Gauge’, which uses a percentage of weighting factors for types of loans, payment history, searches, length of history, and total debt. It also holds other personal information that lenders may need to make an informed decision on your credit application. 

Equifax Credit Scoring

As well as the usual factors used to calculate your credit score, Equifax has information on all of the enquiries on your record, which it will share with lenders. Public records such as CTJs (Country Court Judgements) and bankruptcies are also available. It will not show balance details on savings or current accounts.

Experian Credit Scoring

Experian uses CAIS, the credit account information system, to share your credit score and information with lenders. It also uses the typical mathematical equation to calculate your credit score and keeps this and payment histories, types of loans, county court judgements and IVAs (individual voluntary arrangements) on your file. 

Crediva Credit Scoring

Finally, Crediva is a relatively new credit reporting agency founded in 2017. Not many lenders use this platform to access your credit score, so there is not a massive amount of information available. However, you should take note of whether your chosen credit provider explicitly states that they use Crediva as a source of data and check your Crediva credit report. 

Why Are Business Credit Scores Important?

Your business credit score is a crucial element of your company’s future and can help you to improve and maintain operations, cash flow and success. In terms of business opportunities, a positive credit score can open doors to new partnerships, contracts, and supplier relationships, as it indicates a level of stability and reliability. A strong credit score demonstrates a company’s ability to manage and repay its debts responsibly, increasing its chances of obtaining loans, lines of credit, and favourable interest rates. 

Your business’ credit score can also impact the ratings you are able to obtain with any business finance, for example, a good business with strong credit might obtain asset finance at 5.9% but one with poor credit history might be faced with 16.9% as lenders see their long term future as a much greater risk. Check out our finance calculator if you want to have a look and see for yourself.

Other relationships it can impact are with your supplier, who often assess the creditworthiness of potential customers before extending trade credit. A good credit score can result in more favourable payment terms, such as longer payment periods or lower interest rates. It also strengthens the trust between the company and its suppliers, leading to potential access to better pricing, discounts, or exclusive deals.

Finally, a good business credit score can attract investors, as a high credit score signals financial stability and responsible management, making the company more attractive. This can significantly enhance a company’s ability to raise capital and grow its business.

How to Check Your Business Credit Score

So, checking and monitoring your business credit score is important, but unfortunately, it’s not as easy to access as your personal credit score is. In the UK, there are several credit reference agencies, as deemed necessary by the government. This is to ensure a fair system that allows lenders to compare data across the board. We have listed a few of the most popular CRAs you might like to use above, with a brief overview of their scoring process and the information they have available.

Next, you will need to decide how in-depth you need your business credit score to be. You could use a free tool if you’re only interested in a passing update for a relative idea of how your business credit score is performing. However, it’s important to note that a free credit score report will only include basic and surface-level information. With a paid subscription, you can see what lenders will be given access to, with much more detail and comparative factors. If you’re concerned your credit application may be declined, this is an excellent way to pinpoint the details that are bringing your score down and work on improving those in the future. 

Key Information in Business Credit Reports

You might be surprised by how much information is recorded in your business credit report, and some CRAs feature different aspects of your business history and standing. However, there is some key information which you should find across the board no matter which credit reference agency you choose. This is the crucial information that demonstrates your creditworthiness, risk factor and financial standing. 

Business Details 

As standard, your business credit report will feature details of your business, including the business name, address, company number, and incorporation date. It will also have a brief description placing your business into an industry or sector based on principle activity. 

Key Financials 

As a company, you are obliged to file your key financials, which credit reference agencies use to calculate your business credit score. They are also made available for any creditors wishing to delve deeper into the numbers if they deem it necessary, they will also look at the trend of the recently filed accounts vs those in previous years. Your key financials for your business include company capital, the balance sheet, the profit and loss statement, cash flow and reserves, and other financial items.

Adverse Information 

Adverse information is anything that could signal your business as high-risk credit-wise. If there is adverse information on your account, this could be a major factor in bringing down your score. A prime example of adverse information is a County Court Judgement, or CCJ, which signifies that the business has failed to pay an invoice and has been taken to court to pay the debt. 

Payment History 

An insight into the business’s payment history is also available on the credit report. This could include outstanding invoices and previously made payments. 

Director & Shareholder Details

Finally, your business credit report will also hold information on all directors and shareholders, from basics such as contact details to individual relationships with other companies, both past and present. This will also be displayed if any director or shareholder has ties to a failed company or business. 

Identifying Strengths and Weaknesses In Your Credit Profile

By identifying strengths and weaknesses in your business credit profile, you can proactively work on areas needing improvement and capitalise on your strengths. Regularly monitoring and reviewing your credit profile allows you to track progress, make informed financial decisions, and position your business for better opportunities in the future.

How to Monitor & Improve Your Business Credit Score

Once you have your business credit score, you can use this information to monitor and improve your score in the future. You can find more advice and guidance to monitor and manage your score with the help of our guide on how to improve your business credit score. 

Conclusion

To summarise, it is clear that a strong business credit score holds immense importance for companies across various aspects of their operations. It combines factors such as timely payments, credit utilisation, credit history, and diversity of credit sources to secure financing, access business opportunities, and build strong supplier relationships. 

Understanding your business credit score and its impacts can enhance financial stability and position the business for growth and success in a competitive market.

Contact our expert team today if you’re still unsure or have any further questions on how your business credit score could impact future financial lending.