How to improve your business credit score

Your business credit score is more than just a number. In fact, it can have a significant impact on your business success. Lenders, suppliers, and other creditors will use your business credit score to understand your financial position and whether you will pay your bills on time.

A good credit score is not only important to secure loans and investments, but also to build your business’s creditworthiness. A high credit score demonstrates to lenders that you will make repayments on time which is appealing.

If you have a poor business credit score you may struggle to secure loans, apply for finance, and miss out on growth opportunities. You could even be rejected by lenders or if you do qualify for credit, be offered high interest rates.

To receive better loan terms, get access to cash, and easily qualify for loans and investments, it is important your business has a good credit score.

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This blog will explain how you can improve your business credit score to ensure business expansion, access to finance, and improved supplier relationships.

What is a business credit score?

A business credit score determines a business’s creditworthiness. It considers a number of factors including payment history, age of credit history, debt, and industry risk.

This score helps lenders, suppliers, banks, and other contractors understand the financial position of a business and determine the financial risk of lending to them.

A business credit score can range from zero to 100, with zero indicating a high risk and 100 representing a low risk. The higher your credit score, the better your credit rating.

To improve your credit score, you should aim to get as close to 100 as possible. Generally, a  credit score of 80 or above is considered ‘excellent’.

How can you improve your credit score?

File accounts on time

Just like a personal credit score, your business credit score can be improved by paying your bills on time. Your credit score will also consider your history of paying bills, so it is important to ensure accounts are filed on time and correctly along with other loans and repayments.

By proving to lenders and suppliers that you can make payments on time and have the available funds to do so, you appeal to lenders and are likely to be quickly approved for finance.

Separate business and personal finances

If you are a start-up business or SME with limited financial history or information available, in some instances lenders will use your personal finances to calculate a credit score. However, separating your business and personal finances helps to provide a clearer picture of your company’s cash flow and financial health away from your personal assets.

By keeping business and personal finances separate, you have a better understanding of your business position and can easily identify areas of financial mismanagement.

Outsource to an accountant

When you outsource to an accountant, you can get financial advice, support, and whatever else your business needs. By offering a range of accounting services, from VAT returns to tax support,  whatever your accounting requirements, expert accountants are on hand to help.

At React Accountancy, our fully qualified accountants have you covered. We adhere to practice standards and ethical guidelines to ensure your business is totally compliant. This ensures you never miss a deadline or submit incorrect information that could have a negative impact on your credit score.

We know the complexities of accounting and that’s why we offer a wide range of services and support. To see how we can help to improve your credit score and understand the financial health of your business, get in touch today.

We provide our services across ManchesterStockportLondonBirminghamCardiffBristolGlasgowLeedsNottinghamLeicesterEdinburghSheffieldBradfordCoventryLiverpool and Belfast.

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We believe in working with our clients to make accountancy services easy. Get year-end accounts, CT600 corporation tax, payroll, bookkeeping and management accounts made easy.