Given the problems that business owners have had over the past few years, from the pandemic to the current cost of living crisis, there’s a good chance that many have used up some or all of their emergency fund or taken out credit to keep ticking over.<\/p>\n
If you’ve ever tried to get a loan or credit card, you’ll be well aware the importance that your personal\u00a0 credit score plays – if you’re after the best deals, you have to work hard to get your score up to the required level. But what about your business credit score?<\/p>\n
<\/p>\n
A business credit score gives an indication of how creditworthy lenders will consider your business, in much the same way as your personal credit score gives an indication of your personal creditworthiness.<\/p>\n
Although each lender will have its own lending criteria, and will look at factors such as how long you’ve been trading and your annual turnover, it will also take into account your business credit score – the higher your score, the more likely it is that you’ll be accepted for credit. A higher credit score will also mean your business is more likely to be offered preferable rates on business finance.<\/p>\n
Your business credit score and personal credit aren\u2019t linked, and both contain different information – lenders look at different factors when it comes to business and personal finance.<\/p>\n
Having said that, your business credit score and personal credit score may be be related, which means a lender might also consider your personal credit score when deciding whether to lend to you. This is especially true if you’re a sole trader, as banks and other lenders will almost certainly reference your personal credit to see how well you manage debt.<\/p>\n
The simplest way to find your business credit score is to check with the relevant credit reference agencies, but be aware you might be charged a fee to do so. The three main business credit reference agencies in the UK are Dun & Bradstreet, Equifax\u00a0Business\u00a0and Experian\u00a0Business.<\/p>\n
And be aware that lenders do have their own criteria, so while having a good score with one or all of these agencies will mean you have a better chance of acceptance, it’s not a guarantee that you’ll be accepted for credit.<\/p>\n
Building your business credit score can take time, but\u00a0once you\u2019ve established good business credit, you may be able to qualify for financing without a personal guarantee.<\/p>\n
To start building your business credit score, you should make sure you do the following as soon as possible:<\/p>\n
And if you’ve just started up your business, make sure you keep a handle on your personal finances and personal credit score – remember, lenders might cross-reference your personal credit file, especially if there is little or no information on your business credit report.
\n