Why is your company credit report so important?

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 company 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.

Don’t always assume that your positive personal credit score will be reflected in your company credit score. Whilst suppliers may initially consider your personal credit score, once you start paying bills and get your company running, it’ll be your company credit score they look at. Having a positive company credit score could help your company achieve more competitive loan rates and terms.

Company credit score facts

  • Sharing your information with Credit Reference Agencies (CRA) to have complete and up to date information on your company credit report with a good credit score is the easiest way to get the best financial terms. The longer your business has been running, the more information we hold on it, and more information Companies House will have on it to give a more accurate score.
  • Anyone can credit check businesses and see a limited version of your credit report as opposed to your personal credit report. A more detailed version with Commercial CAIS data will be available to potential lenders and suppliers who are interested in your company and are within a reciprocity agreement. This makes monitoring your company credit score and report through My Business Profile vital to be able to show your business in the best possible light.
Company credit score

 

Neglecting your company credit score could be a fatal mistake. The health of your credit profile can affect how customers, potential lenders and business partners see your company. If you’re looking to expand or improve your company at any point then you may consider a loan for all or part of this. Your company credit report could affect whether your application is successful, and under what terms. This information extends to potential suppliers or business partners who may want to assess whether to work with your company.

Reasons to monitor your company credit report

Avoid unpleasant surprises – Your company credit profile could be one of the factors that companies use to make decisions about you. It can determine whether your loan application is successful, how much credit to offer your business or how much interest you’ll be charged. That’s why it’s important to be aware of what’s on your company credit report so you can monitor it for accuracy and changes.

Know the details published about you – A company credit report is used to present a current and objective picture of how a business manages its financial obligations. A detailed company credit report will provide understandable credit information, including comprehensive demographic, financial and public record information, as well as analytic scores. Credit information would include your payment habits, trade experiences and any trends over time, with public records being any adversities you’ve had (CCJ’s) and demographic information such as your years on file and business size.

Correct mistakes – Your credit report paints a financial picture of your company for the world to see. Incorrect information will present your company in the wrong light to what it actually is and give the wrong impression. This could result in lenders and suppliers making unfavourable decisions due to the incorrect information given to them. By being able to monitor your own company credit report, you can regularly check and identify any mistakes and request it be rectified.

Building your score – A poor company credit score can make it hard or even impossible to get credit from suppliers or get funding when you need it. The first step to building a favourable score is being aware of what your score is now and the factors that can affect it. By understanding these, you can take steps to positively improve your score and not limiting your company to new opportunities.

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Posted on by Cindy Yip

Estimated read time: 5 mins