5 Top tips to improve your credit rating

Most people know that credit scores can impact on you personally but don’t always realise that small businesses also have credit scores, and a poor credit rating can affect your ability to raise finance, obtain good credit terms with suppliers or can mean those great finance lease offers are not an option for your business.


Knowledge is power


A ComRes survey for Experian in 2014 asked financial decision makers in UK SMEs about their credit situation. The results show that directors of small businesses were frequently unaware of what influences their credit rating, let alone how to improve it:


  • Only 13% could correctly identify all the key factors that influence the credit rating of a business.


  • Nearly three in five (59%) small firms had never checked their commercial credit score. And of those that had, over half (56%) hadn’t checked within the previous six months.


It’s not only your credit score that you need to be concerned about either, its your customers credit scores. Knowing their score will allow you to offer the correct terms and determine if you should get payment on deliver or offer credit.


Here are our top 5 tips to improve your score:


  1. Be financially up to date: Prepare regular management information so you can share with potential credit providers to bolster their data on your business, keep Companies House up to date with details of Directors, businesses status and any debentures in place. File accounts on time.
  2. Collaborate with suppliers: Try to ensure your accounts show a growth in the balance sheet. A dip in a balance sheets retained reserves implies you have made a loss, which often isn’t the case. Watch the level of dividends don’t exceed your profit after tax. If needs be delay declaring some dividends to the start of the next year.
  3. Avoid County Court Judgements: If you do get any, make sure you pay them straight away. Any on your record outstanding will ring alarm bells and could result in current credit being withdrawn.
  4. Limit credit applications: Too many credit applications in a short period of time can imply that your business is desperate for cash/finance and therefore adversely affect your credit score. When enquiring about finance ask if getting a quote or offer will be recorded for credit purposes.
  5. Keep tabs on your score: use online tools such as  to monitor your credit position in real time and act on any changes that occur. Sign up for alerts so you know if your score changes.


We can’t guarantee this will improve your score immediately, but over time your rating will improve. Don’t forget to make sure you monitor your customers credit ratings annually (as a minimum) to limit the possible level of bad debts. A big bad debt can result in a reduction in a dip in profits which, if you are small business can be damaging to cashflow.


If you would like to discuss this topic in more detail, or you would like to speak directly with , please contact Jamie Allan or call 07896931595.