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How to fix business credit score

Written By:
Myles Robinson - Expert Finance Advisor

Posted: Jan 4, 2023

Fact Checked By:
David Nicholson - Finance Editor

How to improve your business credit score really quick

How to Improve Your Company’s Business Credit Score:

  1. Make sure you pay your bills on time. Paying your bills late can damage your business credit score and cause credit report problems for your business.
  2. On a regular basis, check your business credit report and business credit score.
  3. Avoid closing bank accounts.

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What is a business credit report and how do you make it better?

A good business credit report is necessary if you are looking to borrow money or set up business credit card facilities. To get your business credit score back on track, we will show you how to improve it.

It is important to improve your business credit score before you apply for credit facilities or business loans.

Although it’s possible to borrow money even if your business credit score is not good, you will likely find there are fewer options. You may be denied financing, which could further damage your credit rating. If you do get a loan, the interest rate will likely be higher with a bad credit report.

There are steps that you can take to improve the business credit score of your business. Improving your business credit will ensure that you are seen by lenders in the best light possible when you apply for business finance or a business credit card.

Small business owners often work hard every day to ensure their businesses thrive. Small business owners are often unable to deal with vendors and customers, and they may neglect their credit ratings. Your business credit rating is a key factor in accessing finance or a business credit card to help you start, grow, and support your business.

Even if your business is based out of your garage, there are chances that you will need to borrow money in order to launch or manage your business.

This basically boils down to having good credit ratings for your business’s credit score. This means that you need to improve your credit rating for a business.

For many small business owners, building creditworthiness for their business isn’t like racing a car with a quick result.

This is similar to your driving record, where all of your past driving behaviours and actions are taken into consideration. These seven easy ways can help improve your business credit rating.

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How do I check my credit score for business?

Lenders use several credit rating agencies to calculate a business credit score, rather than just one official score.

The UK has three credit reference agencies that are government-designated for businesses: Experian (Equifax), Creditsafe (Creditsafe), and Dun & Bradstreet.

You will need to provide your personal information, including your home address, phone number, date of birth, and valid debit/credit card in order to check your business credit score.

To access your score and other information about the business, you might need to sign up for a monthly fee. However, you may be able to get a free trial before you sign up.

You should also be able to access your business credit score. Other tools can help you identify the main factors that influence your score and alert you to any changes.

They will also show lenders what you see when they evaluate your company for a loan application. You can also access your business score, as well as the scores of your competitors and suppliers.

This is a bonus and you can be certain that they will be looking at yours. Experian can help you assess your company’s cash flow risk, and recommend a credit limit.


Do you need to have a good business credit score?

One of many credit rating agencies can help you check your credit score for the business. Each agency has its own method of calculating and displaying scores. Different lenders may use different credit agencies. It is a good idea to compare your business credit scores across multiple companies. A good business credit rating can help your business in many ways.

  • Secure loans/borrowing: Although you might be able to get credit without a good credit score, the terms of the loan may be more difficult. For example, you might not be able to obtain the amount that you desire or there may be higher fees/costs.
  • Save high-interest rates: It compares start-up and business loans which could allow you to get funds within minutes. This might not be possible if your credit score isn’t good.
  • Access to trade credits: It is more likely that a credit line with a supplier will be available if you have a high credit score.

Why is my credit rating so low?

There are many reasons your business might have a bad business credit score.

Pay your bills and invoices on time

Late payments can damage your reputation, your relationships with others and even your businesses. You can damage your credit rating and credit score if you fail to pay your bills to utilities, banks, credit card companies, and government agencies. You may be subject to a penalty and/or a change in interest rate if you fail to make your credit card payments.

You are in too deep debt

Credit rating agencies may downgrade your credit rating if you have taken out multiple business loans or have outstanding credit card balances. This could indicate that the business has taken on too many debts and will have difficulty repaying them or meeting the monthly repayments.

You have already applied for credit or loans

Potential lenders could notice if you submit multiple applications within a short timeframe. This could indicate that your company may be in financial trouble.

Your file contains incorrect information

You could have inaccurate or missing information that is unfairly affecting your business credit rating if you don’t check your credit reports regularly or have not checked them in a while.

You are currently awaiting County Court Judgments.

You can be sued by creditors, suppliers, or contractors if you owe money. This judgment will remain on your record for six years unless you pay it off within one month.

This could negatively impact your credit rating, and your ability to borrow. It may also be a sign that a company is in financial trouble. SME lenders may look at your entire picture before you apply. If you have had a bad customer in the past, but you were able to recover, you can explain that in your application. However, it is better to avoid CCJs entirely.

How do I improve my business credit rating?

It is possible to improve your business credit score with ease. These are the best ways to improve your score.

  • Verify that your file contains correct information.
  • Keep an eye on your score. You can see any changes and make sure you aren’t adversely affected by incorrect information.
  • Invoices and bills paid on time – Establish a policy that invoices are paid within a specified timeframe or at least 30 calendar days. Make sure all employees are aware of this policy.
  • Get rid of CCJs immediately – By paying all your bills on time, your credit score will not be affected by any County Court Judgements against you.
  • Filing accounts on time is a good business practice. It is also a sign that the business is being well managed. Late filing accounts to Companies House will be flagged as a problem. This could affect your credit rating.
  • Manage your debt responsibly Credit rating is best if you have some debt or a credit facility. Credit rating agencies can’t assess how well you manage debt and credit without it. However, you need to make sure that you honour all of your repayment obligations.
  • Check the credit scores of your suppliers You can check your suppliers’ and partners’ credit scores to determine if they’re in good financial standing. You could be left with unpaid invoices if they become financially troubled. This could impact your cash flow.
  • Manage your personal financial affairs responsibly Although personal and business credit scores are distinct, some lenders will consider both.
  • Assess your finances and spending patterns. The faster you can get rid of debt, the better. Avoid using credit cards to withdraw cash at high-interest rates. Instead, switch to lower interest rates. To determine if you are likely to be accepted, do a soft search.

Here are some other tips to improve your business credit rating

Hire the right people

This is true for all levels. Senior staff who have a history of running businesses or saving them might be able to reap the rewards quickly. A partner or director who has a track record of success in start-ups is a wise choice. Credit agencies will check the directors’ past successes. A director will have more experience and possibly more cash in a specific field. However, they may also have more contacts that could provide new investments or revenue streams.

Diversify your customer base

If you rely on only a few high-risk partners/clients, your business could be at risk if they have financial difficulties.

Continue to look for interesting ways to expand your customer base.

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