Business Credit Scores & Reports
Having a strong business credit score is the main way to ensure your company receives competitive credit offers. This report covers all the key areas lenders (and potentially your suppliers) look at in order to assess your businesses financial credibility.
There are a number of Credit Bureaus companies use in order to make these assessments
What is a Business Credit Score?
Personal credit scores will rank the creditworthiness for persons and individuals, whereas a business credit check, scores and ranks the businesses.
There are a number of credible credit agencies, such as Experian, Dun & Bradstreet, Call Credit, and Equifax all produce accurate but slightly different business credit scores and reports. Our credit scoring software takes a combination and overview from all the major credit reference agencies, allowing us to give you an accurate and fair view of your own credit score.
Scores will tend to range from 0 to 100. Scores of 75 or more will be considered good. These scores are your main key to being eligible for funding or any type of commercial finance. The score also effects the price of the credit offered, as it will be judged on risk. Those businesses deemed ‘riskier’ will often find themselves being offered higher interest rates, and lower amounts overall.
Remember: Absolutely anyone can credit check your business and see its public credit rating…which is why it is in your best interests to know and understand whats in that credit report.
What factors determine your business credit score?
Your company credit score will be calculated from a number of effective variables that allow the viewer to take a look at the overall financial health of the business
Factors that determine business credit scores
Credit utilisation and its ratio
Your recent and long term payment history (including historic defaults)
Any current and historic outstanding debts and debters
Public records, such as bankruptcies, IVA’s/CVA’s and judgments
Financial Information (accounts, turnover, net worth)
Industry risk (given in a band rating)
How is your Business Credit Score Used?
Any lender or supplier is going to need to be able to assess your business before they make a decision of whether to either lender or supply your business with extended payment terms. It’s pretty obvious why this needs to be done, and a standardised score allows lenders and suppliers to make quick, effective decisions based on the information contained in your report.
A higher score allows lenders and suppliers to get comfortable with higher amounts, and allows you to be competitive. By checking this information, the business credit scores allows quick evaluations.
Ways in which your credit score can be used
To determine the amount you can borrow. Your business credit report and score can determine how much financing you are able to secure, based on your turnover, payment history, net worth and profitability.
Determine the price of the credit on offer. This information serves to assess your risk and therefore has a direct effect on the price of the business loan or credit on offer. Risk is the number one determining factor for price.
Determines the terms with your suppliers. Suppliers will always look into whether they want to risk offering your business terms (and can even change their terms if they want). Especially for new partnerships they will look at a number of agencies to make their assessment. Terms can be the lifeblood for young businesses, so its in yor interest to ensure your report looks as clean as possible.
How can I improve my business credit score?
There are a number of effective ways to game the system and play around with your credit score, but the best way is simply to follow good business practise
Ways to Improve your Business Credit Score
Pay your business bills on time.
Open multiple lines of credit (business credit cards, business loans, overdrafts).
Keep your credit utilisation ratio around the 20-25% mark