How to check your business credit score: what it means, how to improve it

Just like you have a personal credit score that reflects your own financial health, your business has its own credit score too.

This score gives lenders, suppliers, and potential partners a quick picture of how reliable you are with payments and handling debt. A strong score can open doors, while a weaker one might hold your business back.

To take a few examples of the difference it can make, a solid business credit score will help you secure loans, get better terms on credit, and put your business growth strategies into action. Whether you’re a startup exploring low cost business ideas or an established enterpriselooking to grow, having a good score will keep your business moving forward.

In this guide, we’ll walk you through the essentials of checking your business credit score, including the best ways to keep tabs on how it’s faring. We’ll also look into what entrepreneurs can do to boost business credit scores.

How to do a business credit score check

It’s pretty straightforward to check a business credit score, if you know where to look. Several credit agencies offer business credit score checks, each collecting financial data to calculate scores. However, the methods they use can vary, so your score might differ slightly between agencies.

To get started, you’ll need to choose a credit agency. Some of the most popular options include:

• Experian

• Equifax

• Creditsafe

• Credit Passport

• Dun & Bradstreet

Fees vary widely between agencies, and can range from around £16 to £25 and higher per month, plus VAT. Many agencies offer a free business credit score check or free trial period before asking you to pay for their analysis. 

The cost may seem at first glance like an unnecessary splurge, especially if your small business budget is tight. But it’s important to remember that these agencies do more than just give you a credit score. They help you track payment histories, keep an eye on your financial performance, and offer insights into your business’s overall credit risk.  

How often should you check your business credit score?

Just as bookkeeping for small businesses needs to be done regularly, keeping an eye on your credit score isn’t a one-time task – it should ideally be an ongoing part of your routine as a small business owner. 

Aim to review your score at least every few months. However, if you’re paying for a monthly service, it makes sense to check it more frequently.

Frequent checks can strengthen your small business risk management strategy, helping you to catch issues before they throw off your cash flow forecast and disrupt future investments or growth plans.

Here are a few things to watch out for when reviewing your credit report:

Sudden drop in your credit score  

An abrupt dip in your business credit score could indicate missed payments, rising debt, or even an issue as potentially damaging as credit card fraud. Investigate promptly to identify the cause.

Errors in your report 

Incorrect information, like late payments you didn’t make or accounts that don’t belong to you, can seriously and unnecessarily impact your score. Be sure to dispute any errors as soon as you spot them.

Unfamiliar accounts 

The addition to your report of new financial accounts you don’t recognise, or links with unfamiliar suppliers, might be a sign of fraud. Report these immediately to prevent further damage.

Credit usage spikes

Using too much of your available credit can lower your score. This can happen if you’ve taken on more debt or had a credit limit reduced.

Benefits of a good business credit score

Having the best business credit score possible opens the door to some great perks for your business. These include:

Better financing terms

A solid business credit score helps you qualify for loans, credit cards, and lower interest rates, ultimately saving your business money.

Let’s say you want to invest in several self-service kiosks for your hospitalitybusiness, but need a business loan to cover the outlay. With a good credit score, you’ll have access to more attractive loan terms, helping you make that investment without overstretching your budget.

Enhanced credibility

A strong credit score doesn’t just impress lenders – it can improve the reputation of your business with suppliers, potential partners, and even your clients. It shows that your business is reliable and can be trusted to meet its commitments.

This credibility can lead to better deals, new partnerships, and increased client confidence. Plus, it helps build customer loyalty by showing that your business is on a solid financial footing.

Enhanced agility

Keeping your credit score strong means you’ll be ready to jump on new business opportunities,whether expected or not. If a prime location opens up for a brick-and-mortar store, or you’re thinking of expanding your online business into new markets, your good credit will help you secure the necessary funding quickly.

With a strong financial reputation, you can act fast when opportunity knocks, putting your business in a better position to grow.

How to improve your business credit score

Building your business credit score may take time and effort, but with the right strategies in place, you can get there. Here are some pointers to keep in mind. 

Pay bills on time

Being punctual with bills is absolutely fundamental to building a strong credit score. Missing or delaying payments can quickly drag down your score, while consistent, on-time payments show lenders that your business is reliable.

Setting up automatic payments or calendar reminders can help you stay on track, ensuring that your financial obligations are always met on time.

It’s also important to pay taxes when they’re due. Even though tax payments don’t directly affect your business credit score, falling behind can result in penalties from HMRC, which can soon add up. These setbacks could strain your cash flow,potentially affecting your ability to secure credit in the future.

That’s just another reason it’s important to ensure you file your company tax return and pay what’s owed by the annual deadlines.

Keep business and personal finances separate

For limited companies and LLPs, separating business and personal finances isn’t just a smart move, but part of the legal requirements for starting a small business. 

That obligation aside, opening a dedicated business account is advisable because it declutters your finances, allowing you to focus solely on what your enterprise is earning and spending with no irrelevant transactions getting in the way. This makes it easier to manage your small business expenses and prepare documents like your cash flow statement or year-end accounts.

Separating your finances will also allow your company to establish its own credit history, so that lenders can evaluate your business’s creditworthiness.

 For instance, if you run a retail establishment, having separate accounts will let lenders see how well you manage sales, expenses, and debt. Implementing point-of-sale tools like card readers will streamline recordkeeping by automatically tracking payments and keeping your business finances organised.

Manage credit wisely

It sounds obvious, but taking control of your credit really is one of the smartest ways to improve your business credit score. A key tactic is keeping your credit usage low – ideally below 30% of your available credit. This shows lenders that your business isn’t over-reliant on credit, which helps improve your score.

If you’re already managing your credit well, asking for a credit limit increase can further lower your utilisation ratio without the need to take on more debt. Just be sure not to let that increased limit tempt you into unnecessary spending.

Alternatively, if your business credit history is still in its early stages, opening a new line of credit – whether it’s through a small business loan or credit card – can help improve your score.

A new line of credit diversifies your credit mix and shows lenders you can handle more responsibility. The trick is to keep balances low and always make timely payments to build a positive credit history.

Have a strong business plan

A strong business plan isn’t just for startups – it’s a fantastic tool for established businesses looking to enhance their credit score and grow. 

Whether you’re launching or expanding, knowing how to write a business planwhich clearly lays out vital aspects of your enterprise like your marketing strategy,along with a detailed financial analysis and solid goals shows lenders that your business is serious about long-term success.

For established businesses, a plan can help guide growth, refine strategies, and secure financing to support initiatives like expanding into online business ideas or investing in small business cyber security solutions.

Having this level of preparation will strengthen your case when applying for credit, ultimately improving your credit score.

Build positive relationships

Your relationships with vendors and suppliers can directly impact your credit score. Paying on time or early can encourage suppliers to report positive payment histories to credit agencies, helping improve your score.

Strong supplier relationships can also lead to more favourable terms, such as extended payment periods, which can ease pressure on your small business finances and contribute to your business growth.

Don’t forget about your clients. Offering different ways to carry out transactions, like online payment links or MOTO payments, can encourage clients to settle up quickly, keeping your working capital in the black and ensuring you have the funds needed to stay on top of your own expenses. 

This, in turn, helps you build your business credit score and keep your business financially healthy.

Track and improve cash flow

Your business’s financial health is closely tied to how well you manage your cash flow, and getting that right can make a big difference to your business credit score.

For example, let’s say you’re running a catering company. Businesses in the food and drink industry have to handle regular expenses like supplier payments and fluctuating staffing costs. By sending invoices promptly, and staying on top of payments, you help keep the cash flowing in, ensuring you can cover these bills when due.

In addition to timely invoices, you might think about diversifying your income streams or adjusting pricing strategies to maintain a more consistent flow of funds. The better your cash flow management,the more stable your business will appear to lenders, increasing your chances of securing credit and maintaining a strong credit score.

Disclaimer: The contents of this page are intended for informational purposes only and should not be construed as professional advice. For matters requiring legal or financial expertise, it’s recommended to seek guidance from qualified professionals.