Business Credit Rating
For a few reasons, business owners might need credit. This could be a business loan or even a credit card but whatever it might be, your business credit rating will form the basis of the decision as to whether you are accepted or not.
So, what is it, let us explain it to you in simple words.
What is Business Credit Rating?
In the same way as personal credit scores, a business credit score is based on the financial history of the business. As a result, lenders will use these scores to determine whether a business is likely to meet all repayments.
So, you might choose to open a business account or apply for a loan or even a mobile phone for the business, all of which will be affected by your business credit score. This can affect whether you are accepted, or it can have an impact on the rates you are given.
If you have a low business credit score because you might not have made a number of payments, then you might struggle to obtain the funding you need for your business or you might be given interest rates that are a lot higher than those advertised. Therefore, it is important to have a good credit score, as this will make it easier to obtain credit as well as benefit from better rates.
Where Can You Find Your Business Credit Score?
First and foremost, there is no single business credit score for your business. As a result, there are many credit reporting companies and they all utilise their own scoring system and methods. Therefore, different lenders will opt to use different credit reporting companies when they need to determine your credit score.
So, to find out the business credit rating of your business, you will need to contact one of these companies. This is something that accountants Birmingham can help with.
As Accountants in Coventry, we have advised number of business on issues relating to their credit scoring and how to get it better. Call us if you need any advice related to your personal needs and circumstances.
Enhancing Your Business Credit Score
In the same way as your personal credit score, there are things that you can do to enhance your business credit score.
To begin with, it can help to check your rating. It is common for mistakes to be made and so, you can identify these and ask them to make the relevant correction. Next up, you can open a business bank account in the name of your business while it can help take out business credit such as a credit card or an overdraft. However, it is vital that you ensure you make all repayment on time.
It is also important that you file complete accounts with Companies House on time while having your accounts audited can help too. All bills associated with the business should be paid on time while credit repayments should also be on-time. If you have accounts that are no longer needed, then close them. The more you have open; it could be seen that you need all of that credit and that weaken your rating. Finally, try to keep your applications for credit to a minimum. If one rejects you, then don’t go looking for another straight away. The more applications you make, the more desperate you can look and that can have a negative impact on your rating.