Business Credit Score Explained

Many business owners are unaware that in addition to having a personal credit score, a business that is registered at Companies House can also have a business credit rating.

Below we fully explain what a business credit score is, why it’s so important, how to check your business score and how to build business credit.

What we cover:

What is a business credit score and why is it important?

How do I check my business credit score?

What is an acceptable business credit score?

How to improve your business credit score

What can negatively impact your business credit score?

Does a personal loan affect business credit?

What is a business credit score and why is it important?

A business credit score is just like a personal credit score except it solely relates to your business’s credit history and your business score is available for anyone to view (i.e. suppliers and clients).

If you apply for a business loan, overdraft or credit card, a lender will check your business’s credit score to assess whether your business is creditworthy and whether they should lend your company money. Your company’s credit history will also affect the interest rate you’re offered on any loans or credit cards.

If you’re a sole trader, freelancer, contractor or gig worker, you will not have a company credit score. So if you apply for credit for your business a lender will instead check your personal credit score when assessing your application.

If you’re a Limited Company registered at Companies House, any credit application will be in your business’s name and a lender will look at your limited company credit score.

Looking after your business credit score is just as important as keeping a healthy personal credit score as should you wish to expand your business in the future, having access to business credit will depend on your score and your company’s credit history.

A healthy business credit rating is essential for entrepreneurs who are looking to grow their business, procure investment opportunities and manage their cash flow.

A company credit check is also something that you should conduct as a business owner before taking on new clients or using new suppliers. Before your business enters into a contract with a potential new customer or supplier, to protect your business’s own financial interests you should check that their business has a favourable credit history and rating. A company’s credit rating may also be checked by insurers when you apply for business insurance.

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How do I check my business credit score?

There are five main commercial Credit Reference Agencies (CRAs) in the UK who you can check business credit score with namely:

• Creditsafe
• Credit Passport
• Endole
• Equifax
• Experian

Each CRA’s business score may vary slightly as they tend to have their own unique scoring systems and algorithms - more on this below.

How to check business credit score with Creditsafe

Creditsafe offers a free trial of their global ‘Stay Safe Program’ to access your own company’s credit score and report or to access other companies’ credit scores and reports. Thereafter you have a choice of three different packages: standard, plus or premier. No pricing information is given for these packages on their website, you instead have to apply for pricing information.

How to check business credit score with Credit Passport

Credit Passport offers a free forever, basic credit checking service where you can check your score, get weekly score notifications and personalised offers, a Covid-19 liquidity shortfall calculator and pre-crisis report, credit offers and analysis of your cash flow. Alternatively, you can opt to take out a Plus Plan for £20 per month - a Premium Plan is ‘coming soon’. Their scoring is based on the new OpenBanking standard.

How to check business credit score with Endole

Endole provides a business credit report and credit score information by using, amongst other things, data obtained from Companies House. Endole does not appear to offer a free trial. Instead, if you search for a company, you are given the option to download a single report (from £13 per report) or you can subscribe to the Endole Pro - Annual service (£25 per month) or their Endole Pro- Monthly service (£39 per month).

How to check business credit score with Equifax

Equifax provides a ‘Scorecheck’ service that examines a company’s accounts, accounting data, trading stability, profitability, working capital and more to calculate a business’s credit limit and score. Equifax doesn’t provide a free trial - you have to contact them to find out pricing by telephoning: 0845 6033000 or emailing: [email protected]. You can find out more about their credit checking service called ‘InterConnect’ by clicking here.

How to check business credit score with Experian

Experian currently offers a 3 month free trial for companies who want to check their scores with a service called ‘My Business Profile’. Experian’s unique credit rating is an algorithm called the Delphi Score. After the 3 month trial ends, they charge £24.99 plus VAT per month.

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What is an acceptable business credit score?

Different CRAs have slightly varying scoring systems so there’s no ‘one size fits all’ score that can be deemed ‘acceptable’ across the board.

Acceptable scores or average ratings tend to be at least 50 or above out of 100 or between A and C where the ratings are allocated letters (see infographics and tables below for each CRA’s unique rating system).

Ideally, you should aim to boost your company’s credit score to as close to 100 or an A rating as you possibly can.

CreditSafe’s business credit score ratings:

CreditSafe’s business ratings are the most straightforward with a simple rating system of A to E with A and B being the most favourable ratings for successfully obtaining credit.

Credit Passport’s business credit score ratings:

Credit Passports ratings are from from A++ down to an E. An A+ or A++ rating are the most acceptable ratings for business credit purposes.

Endole’s business credit score ratings:

Endole’s business credit ratings range from 1 to 99 with a score of 82-99 being a secure score.

Experian’s business credit score ratings:

Experian’s unique Delphi scoring system deems a score of 90-100 as ‘very low risk’.

Equifax’s ScoreCheck scores range from 0 to 100 and their ‘ratings’ are allocated one of the following letters: A, B, C, D, E and F - we feel their rating system is synonymous with getting your homework marked by a teacher!

Each letter rating can also be divided into 3 giving the following 18 possible ratings:

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How to improve your business credit score

• Try to file your FULL accounts with Companies House and submit Tax Returns in good time.
• Pay your bills on time and in full and avoid ever having a Default, CCJ or insolvency proceedings recorded on your credit files.
• To build business credit rating, you should regularly share your business’s up-to-date information so CRAs can include data in their ratings. You can also ask your trusted suppliers to do the same.
• Avoid submitting too many credit applications in quick succession - lenders might see you as desperate for money. Instead, ask for a quote or an initial assessment without a hard search being made on your commercial credit files.
• Keep your company’s finances in check; having a business bank account bad credit (i.e. having a large, long-term overdraft) will be a red flag to potential lenders.
• Keep your personal finances in check as if you haven’t much commercial history to go on, CRAs will look at your personal finances to assess your creditworthiness instead.
• Frequently check your business credit score or set up alerts for any changes so you can promptly remedy any issues.

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What can negatively impact your business credit score?

• Not paying bills on time or not paying them at all.
• Too many credit applications in quick succession (where hard searches are recorded on your credit file).
• Not filling your FULL company accounts to Companies House on time.
• Bad credit like an unauthorised overdraft or going over your overdraft limit.

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Does a personal loan affect business credit?

A personal loan should not affect your ability to obtain business credit unless you have missed payments, especially if a default is recorded on your personal credit file.

For this reason, before starting up a business you should check if your personal credit files are in good order because if you apply for business credit when you have no business credit history, then lenders will look at your personal credit files instead.

You can check your personal credit score and history by obtaining a free multi-agency report that includes data from all three of the UK’s main CRAs (Equifax, Experian and TransUnion) with checkmyfile.com.