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You may be aware that your personal credit score has a big impact on your ability to borrow and access credit but, as a business, your company’s credit score is just as central to the kind of access you have to competitive borrowing rates . With bank loans still difficult to come by, having a healthy business credit score could be a case of make or break, helping you to get hold of finance at those all important moments in your company’s development.
It is of the utmost importance, especially for a new company that you make sure to return any loans, for example from companies like business loan providers Everline ahead-of or on-time to keep your credit score healthy.
Running a free company check
If you haven’t looked into your business’s credit score before, but have struggled to source business finance, it may be worth looking into the matter. The likelihood is that your credit score does not fill potential creditors with confidence. It’s easy to confirm these suspicions. Take a look at a free company checking service to uncover just how external parties see your business. Free company checking tools reveal issues like CCJs (County Court Judgement), issues with insolvency, bankruptcies and non-payments. Any black marks like this on your credit report could seriously impact how accessible you find finance to be.
If you can access these details, external parties can too and, as part of due diligence, most creditors will run this kind of check. With non-payment, late payment and bad debt rife among SMEs, most businesses are now very vigilant about who they do business with.
Now you know how your credit score looks, how can you make yourself a more attractive business prospect on paper?
- Pay promptly
Your historic payment details have the biggest impact on your credit score. Missed or late payments can cause your score to plummet, setting off alarm bells in the minds of any potential creditors you may have approached. To keep your score up, do everything you can to meet the payment terms of any invoices you receive from suppliers.
- Get credit where it’s due
Equally, good behaviour (including prompt payment over a long period) will win your business plenty of credit score Brownie points. It’s therefore important that credit agencies are aware of this type of activity instead of letting your exemplary payments slip under the radar.
Large payments made on time over a long period should be flagged up to credit agencies , so make sure you notify them when you are performing this kind of regular transaction. Over time this type of positive activity can radically improve a less-than-fantastic credit score. You can check your credit profile to make sure these transactions are being taken into consideration.
- Get your personal finances in shape
Are you a new business? Are you finding it difficult to access finance? It may be worth taking a look at your personal credit score and, if it’s not looking too peachy, working hard to improve it. In the early stages of a business’s life creditors have little to go on and may look at your personal credit report to inform their lending decision.
- Minimise gearing
If your company’s capital structure is mostly made up of capital from loans, you will have a high level of gearing. This makes lending more to your business a risky proposition for new, prospective creditors. The more you can finance your business with internal funding, the more attractive a lending prospect your business will be (as long as your credit report is more-or-less blemish free).
- Know your landscape
Take some time to check up on the credit scores of your closest competitors who have similar business models at similar stages to yours. Again, a free company checker comes in really useful here. It could well be that your difficulties accessing finance are common to your rivals, in which case you may need to head back to the drawing board to come up with some alternative financing options.
Have you been turned down for finance on the basis of your credit score? Have you managed to drag your score out of the doldrums? We’d love to hear from you. Share your experiences with our readers below!
