Business credit scores: what they are and how to check yours

A business credit score is a number that shows how likely your business is to meet its financial obligations. The British Business Bank describes it as a numerical representation of your business’s creditworthiness, derived from its financial history.

Lenders, landlords and suppliers use it to judge how financially reliable you are. It is one input, not a verdict: a lender also looks at your accounts, your trading and the finance you are asking for, and decides for itself.

Credit reference agencies produce business credit scores, and each uses its own criteria. The British Business Bank names Experian, Creditsafe, Credit Passport and Dun & Bradstreet among the agencies that operate in the UK.

Because the methods differ, the same business can look stronger with one agency than another, and the scales are not interchangeable. The British Business Bank gives one example: Experian’s score runs from 0 to 100, where 0 is high risk and 100 is very low financial risk. A figure from one agency tells you little about a figure from another, so compare like with like.

A business credit score is built from your payment record, your debts and credit use, your filed accounts and public records. The British Business Bank lists the profile that agencies record: payment history, total debt, how long you have held credit, the type of finance you have and recent finance applications.

A county court or High Court judgment stays on the Register of Judgments, Orders and Fines for 6 years, and GOV.UK notes that banks and loan companies use that information when deciding whether to give you credit. You can read more in our guide to county court judgments.

You check a business credit score by requesting a report from a credit reference agency, usually online. The British Business Bank says many agencies offer a free trial but run a subscription model for regular users, so read what you are signing up to before you enter payment details.

• Pick an agency from the list above and search for your company by name or number.
• Compare the details on the report with your own records: name, address, directors and filed accounts.
• Look for any judgments, late payment records or charges you do not recognise.
• Check more than one agency if you can, because each uses different data.

Unlike a personal credit score, your business score is available for anyone to view, according to the British Business Bank. Customers, suppliers and other companies can check it, so it can matter when you negotiate contracts, tenders or insurance as well as when you borrow.

Looking at your own report is a different thing from a lender searching your file for an application, and the ICO says searches on a credit file should not have a negative impact on your credit history. What can count against you is a run of applications for credit.

The ICO adds that lots of searches in a short space of time can suggest you are having trouble getting credit, which can itself affect a lender’s decision. The British Business Bank likewise says making lots of credit applications could negatively affect your score and your access to finance. Our guide to soft and hard credit checks explains how that plays out when you apply.

Yes, they are separate records, though they can overlap. A personal score reflects an individual’s history with personal debts, while a business score reflects the company’s history with suppliers, lenders and other creditors.

The British Business Bank notes that where a small company has little credit history, lenders may consider the owner’s personal credit score. A sole trader has no separate legal entity, so the personal file is the natural place a lender looks. Some lenders also ask directors for a personal guarantee, which brings a director’s own finances into the decision.

Individuals have a right to a free statutory credit report from each agency. The ICO says to look for the phrase ‘statutory report’ on the agency’s website so you do not pay for a subscription you do not need.

You improve a business credit score by paying on time, keeping your filings up to date and not making unnecessary applications. The British Business Bank is clear that there is no quick fix, and that none of these steps guarantees a better score.

• Pay suppliers and other creditors on time, and keep within any overdraft or credit limits.
• File your annual accounts and confirmation statement on time; our guide to filing company accounts explains the process.
• Keep your details accurate and up to date with the agencies, and ask for errors to be corrected.
• Limit credit applications, and apply only where you have a real need.
• Keep your personal finances in order, since some finance looks at both.
• Chase customers who owe you, so your own cash flow can keep you on time. Our guide to debtor days and creditor days shows how to measure that.

A low score makes some finance harder to get but does not close every door. The British Business Bank says a poor rating could make approval more difficult, but it is not always a barrier, and that different types of finance weigh credit history differently.

Secured and asset-backed products may look more at what is being financed, and a lender will still carry out its own credit check. Our guide to business loans with bad credit covers the options, and the lender directory shows which providers offer which products. Any offer is subject to status and lender criteria.

Capzy is a credit broker, not a lender, and is paid by the lender. We do not produce, sell or change credit scores. We introduce businesses to lenders and set out what comes back so you can compare it.

You can check your funding options with a soft search that does not affect your credit score. A full application to a lender may involve a hard search, and each lender makes its own decision, subject to status and lender criteria. Capzy does not give legal or financial advice, so speak to an accountant if you want help reading your credit report.