4 easy ways to improve your business credit

A proactive approach to credit management can open up new opportunities for your business. It positions your business in the best possible light to lenders, partners, and suppliers, whilst ensuring you have easy access to funding, whatever comes your way.

All businesses need funding at some point in their lives, whether it's to support their next level of growth, get off the ground, or plug an unexpected cash flow gap. Your business's credit score is designed to help lenders evaluate how likely you are to repay bills on time, and it directly impacts your likelihood of receiving funding.

A good business credit score is more than just a number– it opens up avenues of possibility that just wouldn't be possible for businesses with a lower credit rating.

A good credit score can help you:

  • Gain better access to funding
  • Raise finance to support your next stage of growth
  • Receive cheaper loans with higher credit limits and better terms
  • Increase working capital
  • Open up opportunities to a wide range of funders
  • Proactively manage and improve your business's cash flow
  • Improve your business reputation

What is a 'good' business credit score?

Business credit scores range from 0 to 100, with 0 representing a high financial risk and 100 representing a low financial risk.

  • Poor: 30 and below
  • Fair: 50 and above
  • Good: 65-70
  • Low Risk: 75-85
  • Excellent: 85 and above
Your business credit score should be sitting at 50 or above but ideally, your goal should be to get as close to 100 as possible.

When should I use credit improvement?

If your credit rating falls within the first 3 categories, you could benefit from credit improvement. Sitting at the lower end of the scale puts your business in the high-risk category, meaning lenders will view you as less 'creditworthy', impacting your ability to access funding.

You should consider taking steps to improve your credit rating if:

  • Your credit rating is not reflective of your business's creditworthiness
  • A lack of working capital is restraining the growth of your business
  • You need a better credit rating to access funding or improve terms
  • A supplier has informed you of a downgrade in your credit rating and reduced their terms.

Your business's credit rating is affected by a range of different factors that can either bump it up or cause it to come crashing down.

Here are 5 quick and easy ways you can improve your business credit:

1. Check your business credit rating online

First thing's first, get clarity on when your business stands by checking your business credit rating using a website like Experian or Equifax.

A low credit score can impact many areas of a business. But when a business is unaware of a low credit rating, the effects can be even more damaging.

These platforms provide you with an up to date view of your business's current credit score, which is the first step in helping you decide whether you need to take action to improve it.

It's a good idea to regularly check your business's credit score and sign up for alerts that notify you of any changes. That way, you can act quickly if your score drops.

2. Pay your bills on time

Cash is king– good cash flow management is vital for helping you maintain a healthy cash position and a good credit rating. It shows you can reliably pay your bills on time and positions your business in the best possible light for potential lenders and suppliers.

Have enough money in your account to cover essential costs, ensure you keep up with any finance repayments, bills and invoices and ensure you have extra money set aside to cover things like tax bills.

Need more ideas? Here are our top tips for managing your cash flow.

3. File your accounts and annual returns on time

Keeping up to date with compliance is one of the simplest ways to avoid your credit score dropping.

Your business's credit score is updated after each set of accounts is filed. This means it's essential to submit accounts when they are due so your rating is an accurate reflection of your business's current financials.

A common reason why businesses have a poor credit score is when their rating is based on previous accounts that aren't up-to-date and don't reflect their current, improved cash position. But this can be avoided by submitting your accounts accurately and on time, with the help of a good accountant to take care of them for you.

Late or impartially completed accounts are also a red flag for credit agencies. That's because credit rating agencies will determine your creditworthiness on whether you meet filing deadlines, amongst other things. Filing the full accounts on time and in line with guidelines, and ensuring your accountant has all the information they need to submit your accounts accurately and on time, is an easy and straightforward way to ensure your credit score doesn't drop in the long run.

Own a limited company? Here's what you need to file and when.

4. Talk to your accountant

A good accountant can work with you to proactively manage your credit score and position your business in the best possible light for credit rating agencies, potential lenders and suppliers. They can also help you implement a foolproof cash flow strategy to open up more funding routes whilst implementing systems and processes that support your business to reach its next level of success.

Ready to improve your business credit rating?

We can help. We can work with you to identify credit improvement opportunities and implement an action plan to boost your business's credit rating.

Working with our partners at Capitalise, we can help you implement a three-step approach to improving your credit score and rating:

1. REVIEW– analyse your current credit score and credit history and look for the issues impacting your creditworthiness.

2. REPAIR – update your credit information, fix the credit problems and begin the process of increasing your credit score and access to funding and credit.

3. IMPROVE – using our accounting experience and financial insight, we can take the steps to improve your credit management approach and boost your rating.

Get in touch to kickstart the process.


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