Tips for building a good business credit score

A strong business credit score can indicate that your company is financially reliable, consistently pays bills on time, and manages credit responsibly. 

When applying for finance – whether it’s a loan, credit card, or overdraft – a strong credit score can improve your chances of approval and even unlock better terms. Those with a strong business credit score may be eligible for lower interest rates, higher credit limits, and longer repayment periods. This can reduce your borrowing costs and give you greater flexibility when financing and investing in your business. 

Credit scores can also affect your supplier relationships. Many suppliers run credit checks before offering trade credit or flexible payment terms. A strong score can help you win new suppliers and negotiate better terms. 

If your business sells to other companies, your clients may check your credit profile before agreeing on contract terms. A low score could raise concerns about your financial stability. A high score, on the other hand, can build trust and make your business more attractive to potential partners and customers. 

Finally, just as others may check your credit score, you can check theirs. Knowing how financially responsible prospective suppliers, partners, and clients are, can help you assess their reliability and potentially avoid late payments or supply chain disruptions in the future.

To create a credit profile, you may need to: 

• Register your business with Companies House (external link) and His Majesty’s Revenue & Customs (HMRC) (external link) to create a legal identity that CRAs can track.
• Open a business bank account to establish your company’s financial history.
• Apply for credit in your business’s name, such as a business credit card, to begin credit activity. 

Once you’ve built your credit profile, various factors can affect your business credit score. Credit reference agencies use data from multiple sources to calculate your score. While each agency has its own scoring methods, best practices for improving and maintaining a high score typically include: 

• Paying your bills on time. Timely payment of business rates, commercial rent, supplier invoices, and credit agreements can demonstrate reliability and improve your credit profile.
• Using credit responsibly. Keeping your credit utilisation low – using only a portion of your available credit – can show that your business borrows wisely.
• Maintaining positive supplier and lender relationships. Communicating with lenders and suppliers during challenging periods and honouring payment terms consistently can help you build trust and negotiate better terms.
• Checking your credit report regularly. Flagging errors such as incorrect business filings, duplicate business listings, fraudulent company applications, and outdated information can ensure your profile is correct and up to date.
• Filing full accounts on time. Submitting accurate and timely statements to HMRC and Companies House can provide a clear picture of your financial health.
• Diversifying your credit sources. Having a mix of credit types, such as invoice financing, business credit cards, and trade credit, shows that your business can manage different financial obligations.
• Checking your partners’ scores. Evaluating the financial stability of your potential partners and key suppliers can help protect your business from risks.
• Reporting errors and fraud promptly. Dispute any inaccuracies, unauthorised payments or fraudulent activity on your business credit file immediately to ensure all information is accurate and up to date.
• Limiting the number of credit applications you make. Applying for credit strategically based on business growth and only when necessary, can reflect good financial planning and health.

Certain factors can negatively affect your business credit score, including: 

• Late or missed payments. Credit rating agencies record these, which can affect your score.
• Excessive borrowing. Using too much of your available credit or relying heavily on short-term finance can suggest financial strain.
• Frequent credit applications. Applying for multiple credit products at once can be considered a sign of poor financial health.
• Not filing accounts or tax returns on time. Late submissions to Companies House or HMRC can affect your score.
• Lack of credit history. Without a track record, credit rating agencies may struggle to assess your risk profile.

Monitoring your business credit score can help you stay informed about the financial health of your business. Regular checks can reveal changes in your score, highlight missed payments, and alert you to errors or fraud. 

You can check your credit score by visiting credit reference agencies’ websites. 

These agencies can provide access to your business credit report, letting you view your credit score and identify what might be affecting your score. They can usually offer free basic reports, known as ‘statutory credit reports’. These basic reports detail your company’s credit history, payment records, and other relevant information. Some CRAs may offer paid subscriptions with additional features, like alerts and analytics. Your score with each agency may vary, so many small businesses review and compare scores across providers. 

Keeping track of your business credit score can be a practical way to see how lenders, suppliers, and partners view the financial health of your business.