Your business credit score is an important factor when it comes to obtaining finance. Loans and new credit accounts with suppliers are dependent on a sound credit score, and there are several ways you can improve yours. Here are just three of them:
1. Check your credit rating
When assessing your eligibility for credit, many suppliers and lenders consult your credit report held by the credit agencies. For a small fee, you can access your credit report. Sometimes low credit scores are caused by incorrect information. Even a mistake in the address of your business can affect your score.
If you have had a county court judgment (CCJ) registered against your business, but you paid the amount owing within 28 days of the registration, the county court record should have been erased.
Any mistakes on your credit report can be rectified by contacting the credit agency and requesting changes. They may require documented proof before they will make changes.
Regularly check your credit report to make sure you maintain a good score.
2. Don’t have too much credit
If you have too much outstanding credit and loans, this can be an issue for lenders. Every time you apply for credit, it appears on your credit record. Unsuccessful credit applications could lower your credit score.
3. Pay on time and get paid on time
It’s always good business practice to pay your bills on time. Aside from the fact that it will help you create a good relationship with your suppliers, it will also improve your credit rating. Late payments may be reported to the credit agencies and this lowers your credit score.
When applying for a new credit account, you may be asked for references from existing suppliers. They may be reluctant to do this if you frequently pay late.
If your business has regular payments, consider paying by direct debit so that payments are made automatically on time. Needless to say, though, make sure there are enough funds in the bank to cover these payments.
To enable you to pay your creditors on time, ensure that you get paid on time yourself. Have robust credit control procedures or use an outsourced accounting service who can administer credit control and make sure your business has a healthy cash flow.
For other ways to improve your credit score, consult a management accounts specialist like Sollertia, as we can offer expertise in this area.