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Tips for improving business creditworthiness

Improving the creditworthiness of your business is essential for gaining access to financing, securing favourable loan terms and building trust with customers, suppliers and partners. Here are some tips to help you enhance your business’s creditworthiness.

Business credit score

The measurement of your business’s financial health is your business credit score. A good business credit score will demonstrate financial stability and creditworthiness.

To determine your credit score, credit reference agencies (CRAs) review publicly available information, including:

  • Your payment performance
  • Your total amount of debt
  • The type of finance you have
  • Any recent finance applications
  • The type of industry you operate in
  • County Court Judgments (CCJs) and insolvency proceedings

The credit score ranges from 0 to 100 – with 0 indicating a high risk and 100 representing a low risk to lenders.

How to improve your business credit score

Here are 11 tips to help you build and maintain a good business credit score:

  1. Pay all suppliers, lenders, utility providers and creditors on time.
  2. If you’re a limited company, file full accounts with HMRC and Companies House rather than abridged, filleted or micro-entity accounts.
  3. File your accounts on time.
  4. Notify HMRC, Companies House and your suppliers promptly of any business information changes, such as a change of registered address.
  5. Only apply for credit when needed and avoid making multiple loan applications simultaneously. Use eligibility checkers or request quotes before officially applying.
  6. Maintain a healthy cash flow and always have enough money in your account, or as an approved overdraft limit, to cover forthcoming payments.
  7. Build up a credit history. You could do this via a short-term business loan or a credit facility.
  8. Check your credit score regularly to spot any inaccuracies so you can deal with them promptly and before they become an issue.
  9. Maintain good relationships with your suppliers and lenders to establish a track record of trust and reliability with other businesses.
  10. Establish relationships with suppliers and vendors who may provide feedback and share payment record data with credit bureaus.
  11. Check the business credit scores of your suppliers, partners and clients to avoid issues, such as late or missed payments or reduced credit terms.

Improving creditworthiness takes time, but consistently applying good financial practices using these tips will impact your business credit score.

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