What affects your business credit score?

A business credit score provides credit agencies, loan issuers and other types of financial vendors with a general insight into how much of a risk you are when it comes to borrowing money.

Businesses of all shapes and sizes frequently find themselves in a position where they need a cash injection at some stage in their business journey. With this in mind, it’s important that you are able to prove to lenders that are you trustworthy and creditworthy.

In order to do this, you must establish strong business credit, and keep on top of your day-to-day finances.

We’ve created a helpful guide outlining some of the factors that could affect your business credit score.

What is a business credit score?

A business credit score applies to your business, unlike your personal credit score. In order to determine whether or not you are creditworthy, your business credit score uses the information from your business credit report.

This includes details such as:

• The number of employees in your business
• Historical data of the business
• Past payment history
• Account information
• Amounts owed

The vast majority of business credit scores are ranked on a scale of 0 to 100. On the other hand, business scores using the FICO Small Business Scoring Service range from 0 to 300.

Benefits of a business credit score

Building strong business credit scores is incredibly important, especially if you are looking to secure finance now or in the near future. Here are some of the benefits that come hand in hand with having a sound credit scores:

• You will be able to access credit for your business more easily
• You will be able to take out business loans at lower rates
• If and when you take out a business loan, you won’t have to sign a personal guarantee that makes you personally liable
• Insurance policy rates are generally lower

Click here, to find out how you can improve your business credit score.

What affects your business credit score?

There are a number of different factors that can have an effect on your business credit score including the following:

Your payment history

In order to maintain a positive business credit score, it’s paramount that you keep on top of your day to day finances, pay everything in a timely manner, do not get in arrears and ensure that you never miss a payment.

The type of accounts you file

At the end of every financial year, you must always ensure that you file your accounts on time, and they are submitted in full. This is because filing your full accounts on time and in line with guidelines can optimise your business credit scores.

County Court Judgments and insolvency proceedings

As with your personal credit score, any County Court Judgments (CCJs) and insolvency proceedings can have a huge impact on your business credit scores and your ability to secure credit.

Why choose React Accountancy?

Here at React Accountancy, we provide trusted accountancy services to start-up, established, and multi-national businesses across a diverse range of industries.

From the moment you get in touch, our approachable, friendly, and professional team will go above and beyond to ensure that you receive the right advice, support, and accountancy solutions for your business.

All of our team has years of experience in providing accountancy services that support your business including complex financial issues.

For more information, get in touch.

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