Commercial Credit score, how it affects your access to finance

Your commercial credit score could be one way in which lenders and other companies you do business with assess your financial stability and set payment terms for you. Your commercial credit report says a lot about your business, determining how you appear to other companies and could be a deciding factor in whether or not people choose to trade with you. If you’re looking to grow your business and want a loan, your score may affect how much a bank is willing to lend to you, or even if they’re willing to lend to you at all.

Let’s first look at the basics of a commercial credit score

Company credit scores normally range from 0 to 100, with 0 representing a high risk and 100 representing low risk. It’s calculated differently according to different Credit Reference Agencies (CRAs), however most scores will take the following factors into account:

  • Age of company – how many years trading under the current ownership structure
  • Number of trade experiences – suppliers who report your speed of payment to the CRAs
  • Payment history – on company credit cards
  • Personal credit history – for firms with less than three principals
  • Companies House – for limited companies only
  • Information available from public records such as bankruptcies or County Court Judgements (CCJ’s)

Combining all the data from these sources the CRAs have developed algorithms that aim  to predict the likelihood of a business failing within the next 12 months. As data is updated the commercial credit score is re-calculated and published to subscribers to the CRAs

So how can you build a healthy commercial credit score, for your business to be reflected in the best light possible?

Steps to building a healthy commercial credit score

  • Keep business information current with the main credit bureaus

For personal credit scores, there’s a standard set of guidelines to be followed to assess your finances but for business credit scores, different bureaus could be calculating it differently resulting in different credit scores. You don’t know which credit bureaux the potential business or bank you want to work with could be using, so it’s best to check your information is correct and up to date with the top three credit bureaus every six months. The more comprehensive your profile, the better. Don’t leave this until the last minute when your business does need finance but make sure you’re prepared for any circumstances your business may face.

You can request  a copy of your company credit report from the three leading CRA’s




  • Establish trade credit with suppliers

If you purchase products, ingredients or other materials from third party suppliers, these purchases could help you build your business credit. Many suppliers will extend credit for you so that you can pay for the goods or services after they’ve been delivered, whether this be a few days or a few weeks. More than likely will have this sort of relationship, if you do, ask them to share your payments with their credit bureau so it can be put on record that your business pays on time.

  • Make your payments on time

Although each CRA will use different methods of calculating your commercial credit score, most or all of them will consider your history of paying creditors bills. To ensure you obtain the best score possible, make sure you pay your creditors on time. To help protect your business against the potential of cash flow issues and delays in payment that may affect your own commitments, check your customer’s payment performance. The more detailed your credit history, the more favourably and accurately you can be assessed so the sooner you can start to establish credit, the better.

  • Keep your public records clean

In addition to detailing your business’ history of paying bills on time, your commercial credit report will also include any public records filed in your business’s name. This includes any adverse information such as bankruptcies or CCJ’s; reflecting negatively in your credit score. Bankruptcies can stay on your file for almost ten years whilst adverse information such as CCJ’s can stay on your file for up to seven years.

Credit reports are only part of the decision
Credit reports are only part of the decision

It’s simple…whether you’re applying for finance with a lender; credit with another business, competing in a tender process or simply trying to get a good deal on your business mobile contract, your commercial credit score will most likely play a role. SMEs are particularly vulnerable to economic changes, so a strong credit score can help you to access the right type of finance for your business, during difficult times.

Having a positive company credit score could help your company achieve more competitive loan rates and terms, remember however, that your score will form only part of the lenders decision, but it is the one area where you can have an influence.



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